NATIONAL COUNCIL ON DISABILITY

Performance & Accountability Report (PAR)

FISCAL YEAR 2010

National Council on Disability (202) 272-2004 Voice

1331 F Street, NW, Suite 850 (202) 272-2074 TTY

Washington, DC 20004 (202) 272-2022 Fax

www.ncd.gov
i

TABLE OF CONTENTS Page

Message from the Chairman..................................................................................... 1

How to Use This Report........................................................................................... 4

Part I: Management’s Discussion and Analysis.............................................................. 5

NCD at a Glance...................................................................................................... 5

Mission & Vision..................................................................................................... 5

Strategic Goals........................................................................................................ 6

NCD Organizational Overview..................................................................................... 8

Organizational Chart................................................................................................ 9

Performance Goals, Objectives, and Results in Brief........................................................... 10

Analysis of Financial Statements.................................................................................. 11

Analysis of Management Controls, Systems and Compliance................................................ 13

Chairman’s Statement of Assurance.......................................................................... 15

Part II: Performance Section.................................................................................... 17

Performance by Strategic Goals................................................................................... 17

Part III: Financial Section....................................................................................... 22

Message from the Executive Director............................................................................ 22

Independent Auditors’ Report..................................................................................... 23

Opinion on Financial Statements............................................................................. 24

Internal Control over Financial Reporting.................................................................. 24

Compliance and Other Matters................................................................................ 25

Appendix A, The National Council on Disability’s Comments on the Draft Audit Report......... 28

Appendix B, Notice of Findings and Recommendations and Agency Responses

 National Council on Disability Fiscal Year 2010 Audit................................................

30

Financial Statements.............................................................................................. 43

Consolidated Balance Sheet................................................................................... 43

Statement of Net Cost.......................................................................................... 44

Statement of Changes in Net Position........................................................................ 45

Statement of Budgetary Resources........................................................................... 47

Notes to the Financial Statements............................................................................ 48

Note 1: Significant Accounting Policies................................................................... 48

Note 2: Fund Balances with Treasury..................................................................... 52

Note 3: Liabilities not covered by Budgetary Resources............................................... 53

Note 4: Other Liabilities.................................................................................... 53

Note 5: Leases................................................................................................ 54

Note 6: Commitments and Contingencies................................................................ 54

Note 7: Earmarked Funds................................................................................... 54

Note 8: Intra-Governmental Costs and Exchange Revenue............................................ 57

Note 9: Apportionment Categories of Obligations Incurred........................................... 57

Note 10: Statement of Budgetary Resources............................................................. 57

Note 11: Reconciliation of Net Cost of Operations to Budget......................................... 58

Note 12: Subsequent Events................................................................................ 58

Part IV: Other Accompanying Information.................................................................. 59

Exhibit A – List of Acronyms.................................................................................... 60
 National Council on Disability

An independent federal agency making recommendations to the President and Congress 

to enhance the quality of life for all Americans with disabilities and their families.

Message from the Chairman

Jonathan Young

Council Chair

On behalf of the members of the National Council on Disability (―NCD‖ or ―the Council‖), I am 

pleased to submit the FY 2010 Performance and Accountability Report (PAR). The Council 

received an unqualified opinion from its independent auditors on its FY 2010 annual financial 

statements. While we are pleased to report an unqualified opinion on the financial statements, 

our scrutiny of internal agency operations and financial management, along with the results of 

the annual audit, revealed significant weaknesses that we are aggressively remedying.

The Council’s role as an independent advisor on disability matters to the President and Congress 

is essential to assuring the Federal government is well informed and qualified to perform their 

duties and effectively serve the public, including individuals with disabilities. NCD carries out 

its mission to promote equality of opportunity, full participation, independent living and 

economic self-sufficiency for people with disabilities of all ages and backgrounds by: continually 

reviewing disability programs and policies, meeting with people with disabilities and other

stakeholders around the country to learn about on-the-ground realities, and providing advice, 

analysis and recommendations on disability policy to the President, Congress, and other federal 

agencies. NCD’s analysis and recommendations have led to enactment of important laws and 

other improvements to the programs and services provided by the many federal agencies that 

serve the disability community. NCD’s most notable achievement is drafting and recommending 

the Americans with Disabilities Act.

During fiscal year 2010, the Council faced significant challenges. In particular, the Council 

endured extensive turnover in key positions. Prior to my confirmation in March 2010, the 

Council Chair resigned (December 2009), the Vice Chair and Finance Committee Chair resigned

(September 2009), the Executive Director resigned (January 2010), and a new interim Executive 

Director was appointed for six months (March 2010). In March 2010 seven new Council 

Members were confirmed, including me as Chairman, and an eighth new member was confirmed 

in June 2010. Another Council Member resigned in September 2010. In addition, during the 

fiscal year NCD also had three staff vacancies. Finally, I appointed a new Executive Director in 

September 2010, who did not start until November 2010. 
In sum, during fiscal year 2010:

 Eleven of fifteen presidentially appointed Council members departed due to resignation 

or replacement

 Eight new members joined the Council

 Three different members served as Chair

 Three different individuals served as Executive Director with a fourth appointed as 

Executive Director at the close of the fiscal year.

The extensive turnover of key positions as well as turnover of more than two-thirds of the 

Council members unleashed new energy and provided an opportunity to reexamine and 

strengthen NCD’s future. However, it also had a direct impact on the Council’s operations.

Accordingly, the Council was unable to issue its annual Progress Report to the President and 

Congress along with this report within the established deadlines. In addition, the Council 

identified four material weaknesses relating to its control environment and financial reporting.

The extent of turnover experienced in fiscal year 2010 would be challenging even for an agency 

whose governance, financial management, operations, and program execution were functioning 

optimally. However, shortly after my appointment as Chairman it became clear that NCD needed

to closely scrutinize its organization, finances, and operations as well as its approach to 

achieving its statutory mission. We therefore undertook a strategic planning process, under the 

guidance of OPM and an independent contractor obtained through OPM. We undertook longterm strategic planning immediately, even though the Council simultaneously had to execute a 

major disability policy summit in July 2010 in honor of the Americans with Disabilities Act’s 

20th anniversary. We also decided to reallocate fiscal year 2010 funds to prioritize internal longterm investments to help put NCD on the foundation needed to achieve its mission more 

effectively.

In connection with a Strategic Plan that is still undergoing modification in light of our ongoing 

internal analysis, the Council is updating its bylaws, revising the organizational structure, and 

performing an assessment of, and investing in improvements in, its current operations, including 

a review of its programs, human capital, information and communications systems, and financial 

management. I am pleased to report that significant efforts have been made to improve the 

overall efficiency and effectiveness of the Council’s operations; however, much more remains to 

be accomplished, as management implements the recommendations received as a result of the 

assessments performed to-date.

This document emphasizes the over-arching goal of the Council to remain responsible stewards 

of the federal funds entrusted to us for the accomplishment of an extremely important mission. It 

also reflects both financial and program performance results and demonstrates our enduring

commitment to fulfill the responsibilities for which the NCD has been entrusted. 

NCD’s accomplishments in fiscal year 2010, as detailed herein, were achieved due to the 

dedicated efforts of Council members and staff. Fortunately, the substantive control weaknesses 

revealed during the fiscal year did not impede the Council’s efforts to achieve its mission. 
Rather, the identified weaknesses provided an opportunity to rebuild the operations of the agency 

equal to the breadth and gravity of its statutory mission. 

Finally, this report provides the results of a variety of assessments regarding our performance 

and financial data, management controls, and financial systems. See Section I of this report for 

greater detail of the Council’s compliance with the Federal Managers’ Financial Integrity Act.

NCD is proud to serve as an advocate for people with all types of disabilities, and of all ages, 

throughout the country. We take very seriously the requirements contained in the laws that allow 

the Council to be entrusted with this responsibility, and I personally pledge that we will take 

aggressive action wherever necessary to uphold this trust. We pledge to continue to achieve the

vision of a country, and society, that accommodates and supports the needs of individuals with 

disabilities, so that they may fully contribute to and enjoy the enduring values of the American 

people.

Sincerely,

Jonathan Young, Ph.D., J.D.

Chairman

April 29, 2011
FY 2010 Performance & Accountability Report Page 4

How To Use This Report

This Performance and Accountability Report (PAR) presents comprehensive performance and 

financial information on the National Council on Disability’s (―NCD‖ or ―Council‖) operations. 

The report was prepared pursuant to the Accountability of Tax Dollars Act of 2002 and Office of 

Management and Budget (OMB) Circular No. A-136, revised, Financial Reporting 

Requirements, and covers activities from October 1, 2009 through September 30, 2010.

The Council places a high importance on keeping the public informed of its activities. To learn 

more about who we are and what we do to serve the American public, visit NCD’s website at 

http://www.ncd.gov/Accountability to access this report.

The FY 2010 Performance and Accountability Report is organized into four sections:

Section I – Management’s Discussion and Analysis (MD&A) provides an overview of the 

NCD. It describes our mission, organizational structure and regulatory responsibility.

Section II – Performance Information summarizes the NCD’s strategic goal and related 

objectives and provides a forward-looking discussion of future challenges.

Section III – Financial Information, including Auditor’s Report details the NCD’s financial 

performance by highlighting the financial position, audit results and describing the NCD’s 

compliance with key legal and regulatory requirements.

Section IV – Other Accompanying Information

Exhibit A – List of Acronyms
Part I: Management's Discussion and Analysis

FY 2010 Performance & Accountability Report Page 5

NCD at a Glance

NCD was initially established in 1978 as an advisory board within the Department of Education 

(Public Law 95-602). The Rehabilitation Act Amendments of 1984 (Public Law 98-221) 

transformed NCD into an independent agency and required NCD to provide expert advice to 

Congress and the Administration on a continuing basis, with particular emphasis on helping to 

ensure that disability programs and policies promoted independence rather than dependence. 

Revisions to NCD’s statutory mandate were subsequently made by the Rehabilitation Act 

Amendments of 1992 and 1998 and the Education of the Deaf Act Technical Amendments of 

1993.

Mission 

The mission of NCD is to promote equality of opportunity, full participation, independent living

and economic self-sufficiency of people with disabilities of all ages and backgrounds by 

providing advice, analysis and recommendations on disability policy to the President, Congress

and other federal agencies. 

NCD is tasked with completing an annual progress report, no later than October 31 each year,

regarding the state of disability in the United States and delivering this along with related 

recommendations to the President and Congress each year. The agency also completes studies 

and research reports on other issues of concern to the disability community, and uses those as 

background for developing policy recommendations for the President, Congress and other 

federal agencies.

Vision

We lead by facilitating, articulating and promoting inclusion and empowerment 

of individuals with disabilities to live, learn and earn based on informed 

choices. 

Disability touches everyone. In 2005, over 54.0 million Americans reported some level of 

disability. Almost all Americans have some experience with disability through their own daily 

experience or contact with relatives, colleagues or friends. At some point, most Americans will 

experience some form of functional limitation as either a disability that is lifelong, was acquired, 

or is part of the typical aging process. 

Americans with disabilities represent a diverse group which includes individuals with physical, 

sensory and intellectual disabilities. Disabilities vary in terms of the impact on functional 

limitations that substantially influences the ability to participate in everyday life, longevity, cause 

and consequences. Some disabilities remain static throughout a person's life while others may 

have periods of remission or regression. 

Through its outreach efforts, in various community venues, and at its quarterly meetings, NCD 

has continually learned about the impact of disability on individuals, families, and their 

communities. NCD findings are shared through comprehensive reports, policy briefs, media 
Part I: Management's Discussion and Analysis

FY 2010 Performance & Accountability Report Page 6

outreach, our award-winning Internet website (http://www.ncd.gov/index.html), and a monthly 

newsletter that receives worldwide attention.

Despite their diverse profile, Americans with disabilities share many common concerns. They 

face personal, social and economic disadvantages and barriers that prevent access to the same 

opportunities as Americans without disabilities. People with disabilities continue, for example, to 

have lower education levels and to be socially isolated and discriminated against in the 

workplace. They often face economic hardship in their daily lives and far too many live below 

the poverty line. Women and people with disabilities from diverse cultures, in particular, 

experience greater disadvantages, reporting higher incidences of unemployment and poverty. 

Americans with disabilities share many common aspirations for themselves and for their country. 

They want a nation which demonstrates leadership with respect to disability issues. Persons with 

disabilities desire a country that respects individual needs and ensures that Americans with 

disabilities have input into the policies, programs and decisions that affect them. They seek a 

country which makes it possible to achieve a decent standard of living and support an approach 

to disability issues that is common to all jurisdictions but sensitive to regional differences and 

needs. People with disabilities want a nation that uses legal and other measures to promote social 

and economic equity and equality of outcomes. 

Through our work, NCD continually seeks to make those aspirations a reality. As the only 

agency in the Federal government that addresses the issues of all people with disabilities,

regardless of type or severity, NCD will be aggressive and resolute until the day arrives when 

people with disabilities in every corner of the world are no longer distinguished by a disability 

label.

We will use the vision, values and guiding principles we adopted, along with an improved 

statement of our mission, as we begin our journey down the pathway to our future. Our vision is 

supported by a set of strategic goals, strategies, objectives, actions and metrics designed to assure 

we are held accountable and that our activities are transparent to our stakeholders. 

Strategic Goals

The Council is transforming its planning processes to ensure all activities create a comprehensive 

and integrated approach to effectively fulfilling its mandate. To achieve this: 1) the Council’s 

Mission Statement, Strategic Goal, and Objectives must articulate the Council’s direction and 

desired outcomes; 2) annual operating plans are developed, budgeted, and executed to implement 

the larger goal and objectives and day-to-day activities; and 3) performance metrics are 

established and applied to determine level of success and to provide a means for review, 

evaluation, and effective improvement. The NCD’s transformation is evident in many ways at 

the staff level and at the Council as a whole.

The Council is reviewing its existing organizational structure to continue its move from a ―flat‖ 

structure to a hierarchal structure that effectively enables NCD to manage its operations and 

achieve its statutory mission. As of the date of this report, NCD is still determining how best to 

implement an optimal hierarchal structure. The Council is trying to balance the need for Strategic 
Part I: Management's Discussion and Analysis

FY 2010 Performance & Accountability Report Page 7

and Operational Planning and Financial Management to meet the various statutory reporting 

requirements, with its ability to meet the Council’s mission and statutory role to advise the 

President, Congress, and other Federal agencies on the enforcement, implementation, and 

effectiveness of the Americans with Disabilities Act (ADA) of 1990, as amended. This is an 

extremely delicate balance, given the approximately $3.2 million of funding NCD receives 

annually, with a current allocation for 12 full-time staff along with 15 Senate-confirmed 

presidential appointees. 

With such limited funding, it is crucial that the Council operate as efficiently and effectively as 

possible to achieve its mission, while ensuring a sound internal control structure allowing NCD 

to comply with applicable laws and regulations. Accordingly, new techniques are being 

employed to establish priorities, assign responsibility for executing them, and tracking them to 

completion.

Together, these planning, execution, and review actions create a structure to best identify and 

accomplish priorities and make the most efficient use of NCD’s resources. Development and 

communication of the Strategic Plan and operational activities inform all NCD staff and the 

public of the direction of the Council and how it will measure success. These long-range 

planning and execution processes provide a framework to effectively adjust programs in 

response to an ever-changing environment. 

The Council is employing a more inclusive approach to develop, adopt, and implement its new 

long-range Strategic Plan. The Strategic Plan is being created by the Council under the direction 

of its management team, the Executive Director, Council members, and the Chairman. As a 

result, the Strategic Plan represents the direction that will be taken to fulfill the legislative and 

regulatory mandates placed on the Council. This direction establishes the long-term 

programmatic requirements, which will be translated into mid and short-term operational 

activities.

The revised Strategic Plan will form the basis for each fiscal year’s annual operating plan and 

associated activities and requirements. The proposed Annual Operating Plan establishes the basis 

and justification for the Council’s Office of Management and Budget (OMB) and Congressional 

budget requests. When the annual appropriation is finalized and placed into law, the fiscal year 

Annual Operating Plan is adjusted as necessary and executed by staff. 

At the end of the fiscal year or at the conclusion of individual activities, staff evaluate 

performance and resource utilization against the performance measures identified in the Strategic 

Plan and in the budget. These evaluations tell the Council how effective it has been and whether 

adjustments are needed in future program activities or resource allocations. 

The described process, while informal, has been in place and has been effective. However, as the 

need for doing more with less is becoming increasingly more evident, a more formal documented 

set of planning processes needs to be developed and put into place. The development and 

implementation of this formal set of processes will ensure the continued success and 

effectiveness of the NCD in not only serving individuals with disabilities, but every single 

taxpayer who has trusted the Council to serve as good stewards.
Part I: Management's Discussion and Analysis

FY 2010 Performance & Accountability Report Page 8

Finally, the Council must be prepared to modify or change its planned direction or level of effort 

if factors not within its control change in unanticipated ways. Some of the factors that could 

materially affect the Council’s operations include:

 Legislation could be enacted that adds to or reduces NCD’s scope of authority or 

increases reporting requirements;

 Appropriations may be above or below the level requested; or

 Critical staff with hard-to-replace competencies may leave or be unable to work for 

some period of time.

Specifically, the Council is working to refine its previous seven goals, which were:

 Goal 1: Increase Levels of Public Participation and Outreach 

 Goal 2: Advise the President and Congress about Issues of Importance to the Disability 

Community through an Annual Progress Report.

 Goal 3: Review Programs, Practices and Policies of Other Federal Agencies and 

Provide Recommendations for Improvement.

 Goal 4: Respond to the Needs and Priorities Identified by the Public by Completing 

Comprehensive Research Reports on Issues of Concern.

 Goal 5: Support the Attendance and Participation of Council Members at Meetings and 

in Activities Where NCD Accomplishments and Outreach Occur.

 Goal 6: Continue to Be Responsible Stewards of Funding Committed to the Support of 

NCD and Its Activities.

 Goal 7: Continue to Work with the Federal Emergency Management Agency (FEMA) 

and Others Responsible for Enhancing the Safety and Security of the Nation's Disability 

Community As Mandated by the Post-Katrina Emergency Management Reform Act.

The revisions to the strategic plan will also achieve compliance with NCD’s reporting 

requirements, under the Government Performance and Results Act (GPRA) and OMB Circular 

No. A-136. Although revision of the strategic plan is still underway, the renewed concepts serve 

as the foundation with respect to implementing and achieving the strategic goal and objectives 

for FY 2010. Accordingly, the Performance Section of this report incorporates the prior year’s 

goals with the overarching goal outlined in the draft strategic plan. 

There is still a great deal of effort needed to meet the goals and objectives set forth in the ADA 

and other pertinent Legislative and Executive Branch policies. Our revised NCD Strategic Plan 

for 2011-2016 will outline the goals, strategies and actions to be employed to help NCD achieve 

its mission. The plan provides a pathway to the future that the Council believes will prove to 

have a positive impact on society.

Organizational Overview

Concurrent with the development of the Council’s Strategic Plan and the mid and short-term 

operational activities, staff determined the related resource requirements to carry out the 

proposed effort. The resource requirements include, among other things, staffing, IT, contractual, 
Part I: Management's Discussion and Analysis

FY 2010 Performance & Accountability Report Page 9

and ancillary needs. The anticipated resource requirements are being reviewed for overall 

reasonableness and effectiveness before finalizing the Strategic Plan. The Council’s Strategic 

Plan and associated resource requirements are being thoroughly vetted and approved by the 

Council members.

As a small agency, operating as a true policy Board, the Council sets the overall agency’s budget 

and establishes the parameters for what it will support. The Executive Director (ED), by 

delegation of the Council, serves as the Chief Operating Officer (COO) directing the effective 

and efficient allocation and use of resources and developing the management and administrative 

policy and programs of the Council. The ED’s responsibilities include management operations, 

legal, secretariat, human resources, financial management, information technology, and 

administration. During FY 2010, NCD had 11 full-time equivalents (FTEs) authorized to report 

directly to the ED, of which only eight of the positions were filled. 

Prior to the strategic planning process, NCD operated on a flat structure, as illustrated below:

As part of the Council’s revision to the Strategic Plan, the Council determined that it needs to 

create an organizational structure enhancing the effectiveness of the staff, operations and its 

systems by reducing the number of functions and consolidating them under a logical grouping. 

As a result, the Council is looking to dramatically restructure its organization to reflect its core 

functions and to prioritize the importance of effective management of finance and operations. 

The revised structure will provide for more delegation of authority, consistent with NCD’s 

legislation. Accordingly, the lines of authority will strengthen communication and enhance 

operational efficiency and effectiveness.

Council Members

Executive 

Director

Special 

Assistant

Executive 

Assistant

Program 

Analyst

Attorney 

Advisor

Attorney 

Advisor

Director 

of 

Research

Director of 

External 

Affairs

Legislative 

Affairs 

Specialist

Staff 

Assistant
Part I: Management's Discussion and Analysis

FY 2010 Performance & Accountability Report Page 10

Performance Goals, Objectives, and Results in Brief

The Council provides leadership in the disability policy arena by building on its traditions of 

innovation, objectivity, independence, and transcending disciplinary boundaries to meet the 

changing needs of society. Influencing the policy making process is important to NCD in the 

work that it conducts as an independent federal advisory agency. Informing and influencing 

federal policy making and implementation is an important core activity of NCD.

Many NCD project and program activities reflect the expectation that the work it undertakes and 

supports will influence or have a positive impact on the policy process, and ultimately improve 

the quality of life and outcomes for Americans with disabilities. Within projects and programs, 

NCD members and staff promote various means of linking their activities to Federal Government 

policy and the work undertaken and supported is often reported to have enhanced decision 

makers’ awareness of policy options or to have been otherwise taken into account in policy 

processes. As is often the case, NCD engages in research and policy analysis that is cumulative 

in nature and its impact may not be measurable within any one fiscal year. Nonetheless, NCD 

works diligently to ensure its efforts have a positive influence and timely impact. The following 

provides a summary of the results NCD attained, as related to the goal outlined in the draft FY 

2010 Strategic Plan:

Goal: Advance the goals of the Americans with Disabilities Act

Objective 1: Improve Processes for Stakeholder Input and Communication

Over the last several years, NCD has provided extensive and wide-ranging outreach to 

individuals with disabilities and members of their communities, closely consulting with them as 

key informants to NCD’s policy work. Many NCD publications have resulted in invitations for 

Council Members or staff to present NCD findings through conference presentations, Internet 

web casts and policy briefings. However, NCD is changing the way it conducts business. While 

NCD’s large publications and reports have generated great interest and have impacted disability 

policy for millions of people, we are moving towards the rapid development of shorter policy 

briefs and white papers instead of lengthy evidence-based research and policy reports to be more

responsive to the immediate needs of the community, particularly in light of today’s fast-paced 

communications.

Objective 2: Increase Emphasis on Effective Disability Policy Implementation 

NCD gathers information from the public through a number of means: public testimony at 

meetings either in person or on toll-free phone lines, electronic mail received on the NCD Web 

site, letters of concern from members of the public, formal public consultations utilizing the 

Internet in order to provide advice on reports underway at NCD, information gathered by 

contractors preparing NCD research reports, interaction between NCD Council Members and 

staff at conferences and meetings of stakeholder groups, and during sessions where NCD is 

releasing its research reports. In addition, NCD has also pursued creation of public-private 

working groups on priority issues such as health care reform implementation to ensure that NCD 
Part I: Management's Discussion and Analysis

FY 2010 Performance & Accountability Report Page 11

is both in continual contact with stakeholders and able to act nimbly in response to identified 

need for action.

Over the past year, NCD reviewed and evaluated key disability laws, programs and policies to 

assess their effectiveness. NCD extended its outreach through public consultations and its 

quarterly board meetings. As a result of these various efforts, and others, NCD issued formal 

advice (e.g., reports, policy papers, proceedings papers, and oral and written testimony) that was 

disseminated to decision makers in the White House and members of the U.S. Congress, key 

leaders in the Executive Branch of the Federal Government, individuals with disabilities, and 

various stakeholders throughout the nation.

To support the Council in achieving its goal and objectives, NCD has also established a tactical 

goal of Creating Effective Staff and Council Operations. Management excellence is a key 

strategy by which the Council strives to ensure its mission is carried out in the most efficient and 

effective manner. Accordingly, the Council is (1) updating its strategic plan; (2) updating its IT 

infrastructure; (3) restructuring its financial operations; (4) updating its policies and procedures 

manual; and (5) updating its performance management system.

As part of these efforts, NCD is also addressing the training needs of its staff. NCD takes its role 

as sound stewards of taxpayer dollars seriously, and wants to ensure that the Council’s 

operations and systems are up-to-date and operating as effectively and efficiently as possible.

NCD’s efforts in advancing the goals of the ADA are delivered through the Council’s Annual 

Progress Report, which reports on the status of individuals with disabilities regarding their needs, 

concerns and progress in becoming integrated into all aspects of our society. These reports, each 

titled National Disability Policy: a Progress Report, are to be delivered to the president and 

Congress. 

The Report discusses the progress made in the past year when it comes to disability programs or 

needs and they also outline challenges being faced by the people with disabilities in this country 

as detailed by them during multiple means of testifying to NCD at quarterly meetings, during 

public consultations, during interviews with researchers engaged in completing NCD reports, or 

in writing. Ultimately, the Annual Progress Report provides NCD with a means in documenting 

and measuring its efforts in achieving its goal and objectives set forth in the Strategic Plan. NCD 

annual progress reports can be viewed on the NCD web site at www.ncd.gov/progress_reports.

See Section II below for further discussion of NCD’s performance goals, objectives and results.

Analysis of Financial Statements 

The Council prepares annual financial statements in accordance with U.S. generally accepted 

accounting principles (GAAP) for Federal government entities and subjects the statements to an 

independent audit to ensure their integrity and reliability in assessing performance. The financial 

statements and notes are presented on a comparative basis in the required format in accordance 

with OMB Circular No. A-136, revised, Financial Reporting Requirements.
Part I: Management's Discussion and Analysis

FY 2010 Performance & Accountability Report Page 12

The following is a brief description of the nature of each required financial statement and its 

relevance. Certain significant balances or conditions are explained to elaborate on the impact on 

the NCD’s operations. Readers are encouraged to gain a deeper understanding by reviewing the 

Council’s financial statements and notes to the accompanying audit report presented in the 

Financial Section of this report.

Balance Sheet

The Balance Sheet presents the total amounts available for use by the Council (assets) against the 

amounts owed (liabilities) and amounts that comprise the difference (Net Position). As a small 

independent agency, 100 percent of the NCD’s assets consist of Fund Balance with Treasury 

(FBWT). Fund Balance with Treasury represents NCD’s cash balances with the U.S. Treasury 

from which the Council is authorized to make expenditures and pay liabilities from operational 

activities. FBWT increased by $141,400, or 9.0 percent, from FY 2009, largely due to 

obligations incurred in the fiscal year but not paid as of September 30, 2010. 

Statement of Net Cost

The Statement of Net Cost presents the annual cost of operating the Council’s programs. Gross 

costs less any earned revenue is used to arrive at the total net cost of operations. The Council’s 

total budget in FY 2010 was approximately $3.3 million. Overall, costs increased by 

approximately 7.3 percent, which relates primarily to an approximate increase of $227,000. 

Approximately $1.7 million, or 52.0 percent, of the budget was dedicated to personnel costs. 

This amount is approximately 6.0 percent below budget due to the significant staff turnover that 

NCD encountered throughout FY 2010. The remaining costs were related to rent, information 

technology initiatives, and general operating expenses. To reduce duplication of administrative 

overhead in the Federal government, NCD depends on larger agencies to provide many of the

support functions that are provided in-house by large agencies, it requires extreme vigilance to 

control costs and ensure that all needs and reporting requirements are being met. The Council 

uses the General Services Administration (GSA) to provide accounting, payroll, human 

resources, facilities management, and legal assistance. The Department of Education provides a 

contracted ethics and conflict of interest attorney on an as-needed basis to educate members and 

staff about their responsibilities as federal employees. The Department of Homeland Security 

provides building security, and the Government Printing Office provides printing services and 

supports the agency Web site. The services provided by these agencies consume about 10 

percent of the Council’s budget. 

Statement of Changes in Net Position

This statement presents in greater detail the net position section of the Balance Sheet, which 

includes Cumulative Results of Operations and Unexpended Appropriations. The statement 

identifies the activity that caused the net position to change during the reporting period. The total 

net position decreased by approximately $10,600.
Part I: Management's Discussion and Analysis

FY 2010 Performance & Accountability Report Page 13

Statement of Budgetary Resources

The Statement of Budgetary Resources provides information on the source and status of 

budgetary resources made available to the NCD during the reporting period. It presents the 

relationship between budget authority and budget outlays, as well as the reconciliation of 

obligations to total outlays. Total Budgetary Resources and Status of Budgetary Resources 

increased by approximately 71,000, or 1.9 percent, over FY 2009. The slight increase is due to 

the limited increase in funding from FY 2009.

Analysis of Management Controls, Systems and Compliance

Federal Managers’ Financial Integrity Act (FMFIA)

The Federal Managers’ Financial Integrity Act (FMFIA) of 1982 is implemented by OMB 

Circular A-123, revised, Management’s Responsibility for Internal Control. The FMFIA requires 

federal agencies to provide an annual statement of assurance regarding management controls and 

financial systems. The objectives of the Council’s internal controls are to provide reasonable 

assurance that:

 Obligations and costs are in compliance with applicable laws;

 Assets are safeguarded against waste, loss, unauthorized use, or misappropriation;

 Revenues and expenditures applicable to Council operations are properly recorded and 

accounted for to permit the preparation of accounts and reliable to financial and statistical 

reports, and to maintain accountability over assets; and

 All programs are efficiently and effectively carried out in accordance with applicable 

laws and management policy.

NCD is unable to provide assurance based on reviews and consideration of internal analyses,

reconciliations and the findings identified in the Independent Auditor’s Report on Internal 

Control Over Financial Reporting, dated April 29, 2011. See pages 23 through 42 for the full 

report.

The Council has determined that internal control weaknesses existed preventing the Council 

from fully achieving the objectives of FMFIA. Specifically, the Council identified the following 

weakness: (1) NCD did not have a framework in place to effectively monitor or manage its 

operations; (2) NCD did not perform risk assessments to adequately assess internal controls; (3) 

NCD has not formally documented procedures on how NCD intends to monitor internal controls; 

and (4) NCD does not have procedures in place to effectively review and monitor financial 

transactions (e.g., open obligations/payables) to ensure the amounts are properly stated on the 

financial statements.

As a result of an ineffective internal control environment, (1) Management reviews and analyses 

of financial transactions was not occurring timely or frequently, increasing the risk that financial 

data may have been misstated; (2) Contract oversight was inconsistent, causing projects and the 

issuance of reports to be delayed, reducing the effectiveness of the recommendations made by 

the Council; and (3) Policies and procedures were outdated.
Part I: Management's Discussion and Analysis

FY 2010 Performance & Accountability Report Page 14

The turnover of key positions heightened the weaknesses within the agency, while also 

highlighting the fact that NCD does not have sufficient depth in its staffing to ensure operations 

are not adversely impacted upon someone’s departure from the Council. Furthermore, the 

turnover brought to light that individuals were performing tasks that they were not sufficiently 

trained to perform. As such, the need for the Council to have updated documented policies and 

procedures became more evident. 

As a result of the issues raised by the Council members and the interim, acting management team 

that was in place during FY 2010, NCD is unable to provide assurance that the Council’s 

management controls comply with the requirements of the FMFIA. As these issues are 

interrelated, NCD has four material weaknesses to report for FY 2010 relating to Section 2 of the 

FMFIA.

Section 4 of the FMFIA requires that agencies' financial management systems controls be 

evaluated annually. NCD evaluated its financial management systems for the fiscal year ending 

September 30, 2010 in accordance with the FMFIA and OMB Circular No. A-127, Financial 

Management Systems, as applicable. NCD uses GSA as its accounting service provider. GSA’s

financial management systems conform with the principles and standards required under Section 

4 of the FMFIA. Accordingly, NCD is able to provide reasonable assurance under Section 4 of 

the FMFIA.
 National Council on Disability

An independent federal agency making recommendations to the President and Congress 

to enhance the quality of life for all Americans with disabilities and their families.

Chairman’s Statement of Assurance 

The Council’s management is responsible for establishing and maintaining effective internal 

control and financial management systems that meet the objectives of the Federal Managers’ 

Financial Integrity Act (FMFIA). The Council is unable to provide assurance that the internal 

controls and financial management systems meet the objectives of FMFIA. 

The Council recognizes that the flat organizational structure and the manner in which 

responsibilities were delegated led to an ineffective control environment. Accordingly, several 

material weaknesses surrounding NCD internal control were identified by the Council, as well as 

the independent auditors. The weaknesses identified were further heightened by the insufficient 

resources with the appropriate skill sets at the member and staff level to effectively manage 

NCD’s operations. As a result, the Council was unable to comply with the reporting 

requirements of its statute or the Accountability of Tax Dollars Act of 2002. Specifically, the 

Council was unable to issue the Annual Progress Report and the Performance and Accountability 

Report within the established deadlines. The Council is fully committed to addressing the 

weakness and will take the steps necessary to also strengthen its internal control. See the 

Summary of the Financial Audit and Management’s Assurances in Section IV of this report, as 

well as the Independent Auditor’s Report on Internal Control for more detail.

The Council conducted its assessment of the effectiveness of internal control in accordance with 

OMB Circular A-123, Management’s Responsibility for Internal Control. Based on the results of 

this evaluation, the Council identified four material weaknesses in total, one over its internal 

control over the effectiveness of financial reporting and three in its internal control over the 

effectiveness and efficiency of operations and compliance with applicable laws and regulations 

as of September 30, 2010. Other than the exceptions noted in the Summary of Financial Audit 

and Managements Assurances of Section IV of this report and the Independent Auditor’s Report 

on Internal Control, dated April 29, 2011, the internal controls were operating effectively and no 

other material weaknesses were found in the design or operation of the internal controls.

Jonathan Young, Ph.D., J.D.

Chairman

April 29, 2011
Part I: Management's Discussion and Analysis

FY 2010 Performance & Accountability Report Page 16

Prompt Payment Act

The Prompt Payment Act requires federal agencies to make timely payments to vendors, 

including any interest penalties for late invoice payments. In FY 2010, the NCD paid an 

immaterial amount in interest penalties on invoices processed.

Federal Financial Management Improvement Act (FFMIA)

Agencies subject to the Accountability of Tax Dollars Act (ATDA) of 2002 are not subject to the 

requirements of FFMIA. Accordingly, since NCD is a federal agency subject to the ATDA, it is 

not subject to the requirements of FFMIA. 

Improper Payments Information Act

The Improper Payments Information Act (P.L. No. 107-300) defined requirements to reduce 

improper/erroneous payments made by the federal government. OMB also has established 

specific reporting requirements for agencies with programs that possess a significant risk of 

erroneous payments and for reporting on the results of recovery auditing activities. A significant 

erroneous payment as defined by OMB guidance is an annual payment in a program that exceeds 

both 2.5 percent of the program payments and $10 million. NCD does not have any programs 

where significant erroneous payments have occurred within the agency. The Council will 

continue to review its financial operations on an annual basis to determine if any significant 

erroneous payments exist.

Limitations of the Financial Statements

The principal financial statements have been prepared to report the financial position and results 

of operations of the Council, pursuant to the requirements of 31 U.S.C. 3515 (b). While the 

statements have been prepared from the books and records of the Council in accordance with 

U.S. generally accepted accounting principles (GAAP) for federal entities and the formats 

prescribed by OMB, the statements are in addition to the financial reports used to monitor and 

control budgetary resources, which are prepared from the same books and records. 

The statements should be read with the realization that they are for a component of the U.S. 

Government, a sovereign entity.
Part II: Performance Section

FY 2010 Performance & Accountability Report Page 17

NCD has a unique mission among federal agencies because it is charged with reviewing all 

programs and policies across the federal government, not merely one aspect of policy affecting 

people with disabilities. While the Council’s independent status allows NCD to provide an 

unbiased overview of many of those agency services and programs, it is the nature of NCD’s 

overview and the recommendations that makes NCD’s work so important in the eyes of those 

who eventually benefit when those recommendations are acted upon by those who have the 

power to do so. 

The Council produces information critical to improving the delivery of programs to individuals

with disabilities. The Council’s series of reports and papers study a broad array of disabilityrelated laws and programs and has resulted in or documented the need for ongoing changes to 

many of the services needed to sustain the health and independence of our most vulnerable 

citizens. These reports can be found at http://www.ncd.gov/publications. In addition, as related 

below, NCD has been given substantial responsibilities for disability-related issues in the 

nationwide effort to improve emergency preparedness and enhance homeland security.

Performance by Strategic Goals

The Council’s Strategic Plan links the agency’s funding to its goals and accomplishments and 

demonstrates NCD’s continued commitment to shaping and preserving a complex framework of 

policies and programs that serve and support people with disabilities nationwide. The following 

is a summary of the results NCD attained, as related to its operations and framed under the draft 

FY 2010 Strategic Plan, which is still under development as of the date of this report.

Goal: Advance the Goals of the Americans with Disabilities Act by promoting policies, 

programs, practices, and procedures that guarantee equal opportunity and provide for 

economic self-sufficiency, independent living, and inclusion and integration into all aspects of 

society for individuals with disabilities.

Objective 1: Improve Processes for Stakeholder Input and Communication

Over the last several years, NCD has provided extensive and wide-ranging outreach to people 

with disabilities and members of their communities, closely consulting with them as key 

informants to NCD’s policy work. To accomplish that mandate NCD conducted six public 

meetings in FY10:

 Nashville, TN October 26–28, 2009 

 Houston, TX January 19–21, 2010 

 Arlington, VA May 13, 2010 

 Washington, DC July 28, 2010 

In addition to the four meetings listed above, there were two additional meetings held via 

telephone conference on April 20, 2010 and September 13, 2010. Public participation in NCD 

meetings has increased approximately 48 percent in the past three years, from approximately 435 

in FY09 to approximately 832 in FY10. Many NCD publications have resulted in invitations for 

Council Members or staff to present NCD findings through conference presentations, Internet 
Part II: Performance Section

FY 2010 Performance & Accountability Report Page 18

web casts and policy briefings. However, NCD is changing the way it conducts business. While 

NCD’s large publications and reports have generated great interest and have impacted disability 

policy for millions of people, we are moving towards the rapid development of shorter policy 

briefs and white papers instead of lengthy evidence-based research and policy reports to be more

responsive to the immediate needs of the community.

From July 25-28, 2010 approximately 500 participants including people with disabilities, 

disability community stakeholders and representatives from Congress and federal agencies 

gathered in Washington to provide recommendations for disability policy for the next decade and 

beyond through NCD’s 2010 ADA Summit. The participants included individuals from 49 

different states plus the District of Columbia, Guam, Puerto Rico as well as other countries.

During the Summit, participants engaged in dialogue and roundtable discussions to identify 

emerging opportunities to improve the coordination of disability policies, programs, and 

advocacy efforts as well as to energize collaborative networks to guide future disability policy. 

To continue the national dialogue begun at the Summit, NCD expanded its outreach by

launching a Facebook page (www.facebook.com/pages/Washington-DC/National-Council-onDisability/131414496898167?v=wall&ref=ts). NCD is dedicated to ensuring that those 

individuals not able to participate in person are able to provide input on the same questions posed 

to the participants.

From October 25-27, 2010 NCD conducted a regional forum in Detroit, Michigan. NCD intends 

to use regional forums and other similar events annually to listen and reach out to stakeholders in 

the disability community.

NCD’s increased outreach activities are not limited to the disability community. NCD needs to 

respond to requests from Congress and the Administration quickly, efficiently, and effectively. 

While NCD has started to move down that path, more work needs to be done in this area. 

NCD also focused on emergency preparedness specific to individuals with disabilities. On 

October 20, 2009, then NCD Chairperson, John Vaughn, testified on emergency preparedness 

before the House Transportation and Infrastructure Subcommittee on Economic Development, 

Public Buildings and Emergency Management at a hearing entitled ―Looking Out for the Very 

Young, the Elderly and Others with Special Needs: Lessons from Katrina and other Major 

Disasters.‖ He addressed the procedures and plans currently in place to aid children and people 

with disabilities during and after a natural disaster.

On June 15, 2010, Chairman Jonathan M. Young testified before the House Homeland Security 

Subcommittee on Emergency Communications, Preparedness and Response on ―Caring for 

Special Needs during Disasters: What’s being done for Vulnerable Populations.‖ The purpose of 

this hearing was to receive testimony on the actions taken by the Federal Emergency 

Management Agency (FEMA), non-profits, and localities to address the needs of vulnerable 

populations, including people with disabilities, the poor, children, and persons with limited 

English proficiency, during disasters. 
Part II: Performance Section

FY 2010 Performance & Accountability Report Page 19

On July 22, 2010, Chairman Young testified before the House Judiciary Subcommittee on the 

Constitution, Civil Rights and Civil Liberties on ―Americans with Disabilities Act at 20 —

Celebrating Our Progress, Affirming Our Commitment.‖ The purpose of the hearing was to 

highlight the ADA’s accomplishments.

Objective 2: Increase Emphasis on Effective Disability Policy Implementation 

NCD gathers information from the public through a number of means: public testimony at 

meetings either in person or on toll-free phone lines, electronic mail received on the NCD Web 

site, letters of concern from members of the public, formal public consultations utilizing the 

Internet in order to provide advice on reports underway at NCD, information gathered by 

contractors preparing NCD research reports, interaction between NCD Council Members and 

staff at conferences and meetings of stakeholder groups, and during sessions where NCD is 

releasing its research reports.

NCD commissioned and participated in the preparation of many reports, papers and briefs. The 

information gathered during the preparation of these reports and during NCD’s periodic meetings 

is typically used by the Council to develop policy recommendations that are shared with 

Congress and the president through the mentioned reports and papers, as well as the annual 

progress report or as needed during discussions about pending legislation. During FY10, NCD 

completed or released reports on the following subjects:

 Five 5 topical briefs on Workforce Investment Act (WIA) reauthorization (vocational 

rehabilitation; youth transition; one-stops; performance indicators; and system 

infrastructure)

 Equality of Opportunity: The Making of the Americans with Disabilities Act (Reissued 

2010)

 Workforce Infrastructure in Support of People with Disabilities: Matching Human 

Resources to Service Needs

 The State of Housing in America in the 21st Century: A Disability Perspective

 NCD 2010 National Disability Policy Summit Proceedings Report

NCD also had the following reports or studies underway during FY 2010:

 United States Marine Corps Exceptional Family Members: How to Improve Access to 

Health Care, Special Education, and Long-Term Supports and Services to Family 

Members with Disabilities. This effort is examining the unique challenges of active duty 

Marines with family members with disabilities, assess the services provided to them by 

the Marine Corps Exceptional Family Program, and make recommendations to enhance 

access to disability-related services, including health care, special education and related 

services, and long-term services and supports. 

 The Prospect of Digital Inclusion: Technology’s Impact on Employment and 

Opportunities for People with Disabilities. NCD explored the utility and accessibility of 

key digital technologies and media that have the potential to enhance social engagement, 
Part II: Performance Section

FY 2010 Performance & Accountability Report Page 20

increase opportunities for workplace participation and heighten employment prospects -

or create new employment opportunities for people with disabilities using the networked 

economy. 

 Toward the Full Inclusion of People with Disabilities: Examining the Accessibility of 

Overseas Facilities and Programs Funded by the United States. This report assesses the 

implementation of disability inclusion in US Government-funded overseas programs, 

facilities, and employment opportunities.

 Rising Expectations: The Developmental Disabilities Rights Act Revisited (developed 

during FY2010). This report addresses what the Developmental Disabilities Act 

accomplished in the past 40 years; what the strengths and weaknesses of the current 

structure are; and whether the structure is suited to address the current and future social 

and policy environment.

In keeping with its mission to advise Congress, in April 2010, NCD provided the U.S. House 

Committee on Education and Labor a set of policy principles and recommendations for the 

Committee’s consideration during the Elementary and Secondary Education Act (ESEA), also 

known as the No Child Left Behind Act (NCLBA) reauthorization.

On January 19, 2010, NCD submitted a report to President Obama entitled, The State of Housing 

in America in the 21st Century: A Disability Perspective. The report offers recommendations to 

improve housing opportunities for people with disabilities. The report highlights the need for 

additional housing that is affordable, accessible and appropriate.

From NCD’s review of the Summit activities and national dialogue, its Board deliberations, and 

the activities and accomplishments highlighted in NCD’s Annual Progress Report, NCD believes 

policies can and will be underpinned by a more integrated and coordinated approach to 

government programs. Importantly, the approach will recognize not only the complexity of 

implementing disability policies, but also the intricacies of people’s lives and the intersection and 

interdependence of the many programs needed to address those lives.

As previously discussed, NCD releases its Progress Report annually to the President and 

Congress based on research completed during the preceding year. However, in 2010 based on 

the strategic plan and in consultation with Congressional staff and the White House, the Council

chose to redevelop the report’s contents and decided not to release a report in October 2010. 

NCD believed that the NCD report did not meet the needs of Congress, the President and 

Administration, or the disability community. 

The annual report will continue to highlight successes and the need for continuing emphasis on 

the implementation of Federal laws, rules, and programs affecting the disability community. 

However, future annual reports will not only discuss the actions of the Council but will also 

highlight the effectiveness of actions necessary to implement policies, programs, and practices in 

support of the disability community, as specified in NCD’s authorizing statute. Furthermore, 

these reports will provide a significant discussion of the overall state of the disability community 
Part II: Performance Section

FY 2010 Performance & Accountability Report Page 21

and the policies affecting it based upon the information NCD develops through use of the 

strategies envisioned in the strategic plan.

Support Objective – Management Excellence

Provide operations and systems that support NCD staff and enable the Council to operate as 

efficiently and effectively as possible.

The Council places a high priority on ensuring the effective use of technology and internal 

procedures to optimize its operations. Management excellence is a key strategy by which the 

Council strives to ensure its mission is in the most efficient and effective manner. Consistent 

with the President’s Management Agenda (PMA), the Council is updating its human capital plan 

to better address the following elements: (1) strategic alignment; (2) workforce planning; (3) 

leadership development; and (4) knowledge transfer and results-oriented performance.

Furthermore, the Council believes that, in addition to investing in its people, strong financial 

management and up-to-date technology are critical means to achieving its mission. Accordingly, 

NCD continues to improve its programs and operations, strengthening internal controls, financial 

management, and information technology across the agency. 

For example, during FY 2010, NCD began the following initiatives:

 Updating the bylaws, strategic plan, policies and procedures, and performance 

management system to ensure that staff understands their role and responsibilities.

 Assessing IT infrastructure, which included identifying enhancements relating to risk 

assessments of operations, disaster recovery, continuity of operations and accessibility.

 Upgrading its website to make information more accessible and proactively available to 

the public in support of the Administration’s initiative for more transparency.

 Implementing a ―Facebook‖ page that encourages an open dialogue, further expanding its 

outreach and collaborative efforts with its stakeholders.

 Restructuring its organization structure from a horizontal organization to a hierarchical 

organization to enhance communication.

 Identifying training needs of its staff.

NCD recognizes the progress it has made and the accomplishments achieved by its staff to 

enhance the efficiency of its operations. However, NCD recognizes more progress is needed. In 

the past year, NCD has encountered turnover in key positions, which included the Chairman, 

Vice Chairman, the Executive Director, along with other management positions. Such turnover 

prevented NCD from accomplishing many of its intended objectives. In addition, several vacant 

positions remained open longer than anticipated due to management’s decision to delay hiring 

until there was more clarity about staffing priorities, which resulted in an insufficient number of

staff to accomplish the work. Staff shortages had a direct impact on NCD’s ability to hold 

meetings, conferences, and hearings or to prepare reports in a timely manner. NCD will continue 

to focus on resolution of issues identified in audits, establishing sound policies and procedures, 

educating staff on the relationship between budget and performance, maximizing use of staff and 

financial resources, and training NCD staff on responsible financial management processes.
Part III: Financial Section

Message From the Executive Director

I am pleased to report that for the fourth consecutive year, the Council earned an unqualified 

―clean‖ audit opinion on its consolidated financial statements. However, during FY 2010, the 

Council endured numerous issues that adversely impacted its internal control, which ultimately 

led to the identification of four material weaknesses. As noted in the Chairman’s Letter, NCD 

encountered a high level of turnover in several key leadership positions. Such turnover 

highlighted NCD’s organizational structure was in need of a major overhaul. In particular, the 

financial operations needed more resources in order to process transactions accurately and 

timely. As a result of the lack of resources, management was unable to perform a thorough 

review of key financial transactions, which ultimately resulted in a material weakness being cited 

by the independent auditors specific to undelivered orders/accounts payable. 

Since the controls were deficient for a significant portion of FY 2010, which covers the period of 

October 1, 2009 through September 30, 2010, the weaknesses noted by management, as well as 

the auditors, were not fully resolved in FY 2010. However, NCD had begun to take steps to 

address the deficiencies, which are still underway in FY 2011. NCD has outlined several actions 

needed to resolve the weaknesses, and most importantly to strengthen its internal control. To 

date, we have begun to address several of the recommendations, including:

 Assessing current operational processes and systems;

 Identifying training needs for employees to further enhance awareness of financial 

management; and

 Updating policies and procedures as they pertain to programs, administrative matters, and 

financial management.

We recognize improvement is a continuous process and more needs to be done to further 

strengthen internal controls, as outlined by the recommendations made in the Auditor’s Report 

on Internal Control. We take financial accountability very seriously and are committed to 

effective internal control and performance, while also providing the taxpayers with the service 

they expect and deserve. NCD has made financial management a priority in FY 2011 and is 

committed to ensuring it has the organization, systems, and resources to sustain an unqualified 

opinion in future years, demonstrating our ability to serve as trusted stewards.

Finally, I want to take this opportunity to acknowledge the efforts of the Council’s interim acting 

management and the entire staff that made financial management a priority during FY 2010 

during a time of tremendous instability and difficulty. The unqualified opinion is fully 

attributable to their dedication and commitment to quality financial management.

Aaron Bishop

Executive Director
 Tel. 202.332.3566 ∙ Fax 202.332.3672 ∙ www.martinwallcpa.com

1633 Q Street, NW ∙ Suite 230 ∙ Washington, DC 20009

Independent Auditors’ Report

Chairman, Executive Director and Council Members

National Council on Disability

Washington, DC

In accordance with the Accountability of Tax Dollars Act of 2002, we are responsible for 

conducting audits of the National Council on Disability. We have audited the accompanying 

balance sheets of the National Council on Disability as of September 30, 2010 and 2009, and the 

related statements of net cost, changes in net position, and budgetary resources for the years then 

ended. 

The objective of our audits was to express an opinion on the fair presentation of these financial 

statements. In connection with our fiscal year 2010 audit, we also considered the National 

Council on Disability’ internal control over financial reporting and tested the Council’s 

compliance with selected provisions of applicable laws and regulations that could have a direct 

and material effect on these financial statements. 

Summary

In our audits of the National Council on Disability for the fiscal year ended September 30, 2010 

and 2009, we found:

 The financial statements are presented fairly, in all material respects, in conformity with 

U.S. generally accepted accounting principles,

 Four material weaknesses in internal control over financial reporting,

 No reportable noncompliance with laws and regulations we tested.

The following sections discuss our opinion on the Council’s financial statements; our 

consideration of the Council’s internal controls over financial reporting; our tests of the 

Council’s compliance with certain provisions of applicable laws, regulations, and contracts; and 

management’s and our responsibilities.
Opinion on Financial Statements

We have audited the accompanying balance sheets of the National Council on Disability as of 

September 30, 2010 and 2009, and the related statements of net cost, changes in net position, and 

budgetary resources for the years then ended. 

In our opinion, the financial statements referred to above, including the accompanying notes, 

present fairly, in all material respects, the financial position of the National Council on 

Disability, as of September 30, 2010 and 2009, and its net costs, changes in net position, and 

budgetary resources for the years then ended, in conformity with U.S. generally accepted 

accounting principles.

The information in the Management’s Discussion and Analysis, Required Supplementary 

Stewardship Information and Required Supplementary Information sections is not a required part 

of the financial statements, but is supplemental information required by U.S. generally accepted 

accounting principles. We have applied certain limited procedures, which consisted of 

principally inquiries of management regarding the methods of measurement and presentation of 

this information. However, we did not audit this information and, accordingly, we express no 

opinion on it.

Internal Control Over Financial Reporting

A deficiency in internal control exists when the design or operation of a control does not allow 

management or employees, in the normal course of performing their assigned functions, to 

prevent, or detect and correct misstatements on a timely basis. A material weakness is a 

deficiency, or combination of deficiencies, in internal control such that there is a reasonable 

possibility that a material misstatement of the entity’s financial statements , fraud or 

noncompliance in amounts that would be material to the financial statements will not be 

prevented, or detected and corrected on a timely basis.

Our consideration of internal control over financial reporting was for the limited purpose 

described in the Responsibilities section and was not designed to identify all deficiencies in 

internal control over financial reporting that might be deficiencies, significant deficiencies, or 

material weaknesses. 

In our fiscal year 2010 audit, we identified four deficiencies in internal control over financial 

reporting that we consider to be material weaknesses, as defined above.

 NFR 10-01 Ineffective Control Environment

 NFR 10-02 Ineffective Risk Assessment Process

 NFR 10-03 Ineffective On-Going Monitoring of Internal Control Effectiveness

 NFR 10-04 Ineffective Process for Period End Review of Accounts Payable and 

Undelivered Orders.
See Appendix B – Notice of Findings and Recommendations, and Agency Responses, for details 

of condition, criteria, cause, effect, recommendations, and agency responses.

We noted certain additional matters that we reported to the Council’s management addressing 

internal control matters in a letter dated April 29, 2011.

Compliance and Other Matters

The results of our tests of compliance as described in the Responsibilities section of this report 

disclosed no instances of noncompliance or other matters that are required to be reported herein 

under Government Auditing Standards issued by the Comptroller General of the United States, 

and Office of Management and Budget (OMB) Bulletin No. 07-04, Audit Requirements for 

Federal Financial Statements, as amended.

Responsibilities

Management Responsibilities: National Council on Disability’s management is responsible for 

(1) preparing the financial statements in conformity with U.S. generally accepted accounting 

principles, (2) establishing and maintaining effective internal control, and (3) complying with 

laws, regulations, and contracts and applicable to the Council.

Auditor’s Responsibilities: Our responsibility is to express an opinion on the fiscal year 2010 

and 2009 financial statements of the National Council on Disability based on our audit. We 

conducted our audit in accordance with auditing standards generally accepted in the United 

States of America; the standards applicable to financial audits contained in Government Auditing 

Standards, issued by the Comptroller General of the United States; and OMB Bulletin No. 07-

04, as amended. Those standards and OMB Bulletin 07-04, as amended, require that we plan 

and perform the audit to obtain reasonable assurance about whether the financial statements are 

free of material misstatement. An audit includes consideration of internal control over financial 

reporting as a basis for designing audit procedures that are appropriate in the circumstances, but 

not for the purpose of expressing an opinion on the effectiveness of the National Council on 

Disability’ internal control over financial reporting. Accordingly, we express no such opinion. 

An audit also includes:

 Examining, on a test basis, evidence supporting the amounts and disclosures in the 

financial statements;

 Assessing the accounting principles used and significant estimates made by management;

 Evaluating the overall financial statement presentation; 

 Obtaining an understanding of the entity and its operations, including its internal control 

related to financial reporting (including safeguarding assets), and compliance with laws 

and regulations (including execution of transactions in accordance with budget authority);

 Considering the design of the process for evaluating and reporting on internal control;
 Testing compliance with selected provisions of laws, regulations, grants and controls 

applicable to the Council that could have a direct and material effect on the financial 

statements.

We believe that our audits provide a reasonable basis for our opinion.

In planning and performing our fiscal year 2010 audit, we considered the National Council on 

Disability’ internal control over financial reporting by obtaining an understanding of the 

Council’s internal control, determining whether internal controls had been placed in operation, 

assessing control risk, and performing tests of controls as a basis for designing our auditing 

procedures for the purpose of expressing an opinion on the financial statement, but not for the 

purpose of expressing an opinion on the effectiveness of the Council’s internal control over 

financial reporting. Accordingly, we do not express an opinion on the effectiveness of the 

Council’s internal control over financial reporting. We did not test all internal controls relevant 

to operating objectives as broadly defined by the Federal Managers’ Financial Integrity Act of 

1982. Because of inherent limitations in internal control, misstatements due to error or fraud, 

losses, or noncompliance may nevertheless occur and not be detected. We also caution that 

projecting our evaluation to future periods is subject to the risk that controls may become

inadequate because of changes in conditions or that the degree of compliance with controls may 

deteriorate. In addition, we caution that our internal control testing may not be sufficient for 

other purposes.

As part of obtaining reasonable assurance about whether the National Council on Disability’ 

fiscal year 2010 financial statements are free of material misstatement, we performed tests of the 

Council’s compliance with certain provisions of laws, regulations, contracts and grant 

agreements, noncompliance with which could have a direct and material effect on the 

determination of financial statement amounts, and certain provisions of other laws and 

regulations specified in OMB Bulletin No. 07-04, Audit Requirements for Federal Financial 

Statements, as amended. We limited our tests of compliance to the provisions described in the 

preceding sentence, and we did not test compliance with all laws, regulations, and contracts 

applicable to the Council. However, providing an opinion on compliance with laws, regulations, 

contracts and grant agreements was not an objective of our audit, and accordingly, we do not 

express such an opinion. We caution that noncompliance may occur and not be detected by these 

tests and that such testing may not be sufficient for other purposes.

Agency Comments and Our Evaluation

In commenting on a draft of this report (see Appendix A), the National Council on Disability 

concurred with the facts and conclusions in our report. 
Use and Distribution of Report

This report is intended sole for the information and use of the National Council on Disability’s 

management, Council Members, U.S. Office of Management and Budget, the U.S. Government 

Accountability Office, and the U.S. Congress and is not intended to be and should not be used by 

anyone other than these specified parties.

Washington, DC

April 29, 2011
FY 2010 Performance & Accountability Report Page 28

Appendix A

The National Council on Disability 

Comments on the Draft Audit Report
 National Council on Disability

An independent federal agency making recommendations to the President and Congress 

to enhance the quality of life for all Americans with disabilities and their families.

April 29, 2011

Martin & Wall, P.C. 

Andrew B. Martin, MS, CFE, CFF, CICA, CPA

Managing Partner

1633 Q Street, NW

Suite 230

Washington, DC 20009

Dear Mr. Martin:

We have reviewed the draft audit report provided to us relating to your audits of National 

Council on Disability for the fiscal years ended September 30, 2010 and 2009. We concur with 

the facts and conclusions in the draft report. We have provided responses to notice of findings 

and recommendations in Appendix B.

Sincerely,

Aaron Bishop

Executive Director
Appendix B – Notice of Findings and Recommendations and Agency Responses

Page 1 of 13

Appendix B

Notice of Findings and Recommendations and Agency Responses

National Council on Disability Fiscal Year 2010 Audit
Appendix B – Notice of Findings and Recommendations and Agency Responses

Page 2 of 13

Notice of Findings and Recommendations (NFR) Summary Table

Table Key: CD=Control Deficiency, SD=Significant Deficiency and MW=Material Weakness

Risk Level Affected Activity

NFR# Findings by Area CD SD MW Financial 

Reporting Compliance

Entity Level Controls

10-01 Ineffective Control Environment   

10-02 Ineffective Risk Assessment Process   

10-03 Ineffective On-Going Monitoring of 

Internal Control Effectiveness

  

Accounts Payable & Undelivered Orders

10-04 Ineffective Process for Period End 

Review of Accounts Payable and 

Undelivered Orders

  

The following pages present the condition, criteria, cause, effect, recommendation and 

management response for each NFR.
Appendix B – Notice of Findings and Recommendations and Agency Responses

Page 3 of 13

Material Weaknesses

Entity-Level Controls

10-01: Ineffective Control Environment

Condition: 

During the fiscal year ended September 30, 2010, the National Council on Disability experienced 

numerous resignations, new appointments and vacancies in senior leadership positions that 

exposed an inconsistent and ineffective control environment, which undermined the 

effectiveness of the remaining components of internal control (i.e. risk assessment, information 

and communication systems, control activities, and monitoring). Specific deficiencies include:

1. The governing body has not established a senior management council or audit committee 

to define financial reporting and compliance requirements and internal control objectives

related to those requirements.

2. The governing body has not performed a formal, written risk assessment to identify risks 

of material misstatement of the financial statements, fraud, and non-compliance with 

laws and regulations that could have a direct and material effect on the financial 

statements.

3. The governing body has not developed a formal process to evaluate if internal controls 

have been suitability design to mitigate identified risks, to determine if controls have 

been implemented, and whether controls are operating effectively or have been 

overwritten.

4. The governing body failed to establish a formal process for monitoring corrective actions 

for audit report findings.

Criteria:

The Federal Manager’s Financial Integrity Act of 1982 (FMFIA) requires federal agency 

managers to comply with specific standards for internal control in the federal government as 

established by the U.S. Government Accountability Office (GAO). Specific internal control 

guidance is provided in GAO’s Standards for Internal Control in the Federal Government

(Green Book) and OMB Circular No. A-123, Management’s Responsibility for Internal Control. 

These internal control standards establish three broad internal control objectives:

 Effectiveness and efficiency of operations

 Reliability of financial reporting

 Compliance with applicable laws and regulations

GAO published its ―Internal Control Management and Evaluation Tool‖ in August 2001 

(http://www.gao.gov/new.items/d011008g.pdf) to provide federal agency managers with best 
Appendix B – Notice of Findings and Recommendations and Agency Responses

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practices for evaluating the five integrated components of internal control applied to a federal 

agency context. The best practices are based on The Committee of Sponsoring Organizations of 

the Treadway Commission’s (COSO) “Internal Control – Integrated Framework” that 

established standards for designing and implementing effective internal controls. The COSO 

Report defines an integrated framework for assessing the adequacy of internal control in five 

components: control environment, risk assessment, control activities, information and 

communication systems, and monitoring. The accounting profession, the federal government and 

the private sector have all adopted COSO as best practices.

The control environment is the organizational structure and culture created by management and 

employees to sustain organizational support for effective internal control. This includes 

evaluating systems for: (i) communicating integrity and values throughout the organization and 

identifying instances of management override of internal controls; (ii) demonstrating a 

commitment to competence through appropriate human capital policies; (iii) a management 

philosophy and operating style that properly evaluates enterprise, program, financial and 

compliance risks, implements performance based management, minimizes employee turnover, 

and communicates an appropriate attitude toward financial, budgetary, and 

operational/programmatic reporting; and (iv) developing an organization structure that is 

appropriate for the size of the agency, properly defines roles and responsibilities and assigns 

authority and responsibility accordingly; (v) human capital policies; and (vi) oversight groups. 

Evaluating the capabilities of key personnel with responsibilities for executing key controls (such 

as authorization, reconciliation, and management review) and the workload of those individuals 

is particularly important.

Statement on Auditing Standards (SAS) 109, Understanding the Entity and its Environment and 

Assessing the Risks of Material Misstatement, is guidance to auditors for identifying risks and 

evaluating the effectiveness of controls designed to reduce those risks to an acceptable level. 

SAS 109 indicates:

the primary responsibility for the prevention and detection of fraud and error rests 

with those charged with governance and the management of the entity. In 

evaluating the design of the entity’s control environment, the auditor should 

consider [whether the elements mentioned above] have been incorporated into the 

entity’s processes.

The American Institute of Certified Public Accountants (AICPA) has published ―The Audit 

Committee Toolkit: Government Organizations‖ to advise on best practices for formulating a 

senior management council or audit committee. That publication states:

Governing body/audit committee. A strong, active governing body is necessary. 

This is particularly important when the organization is controlled by an executive 

or management team with tight reins over the organization and the people within 

the organization. The governing body should recognize that its scope of oversight 

of the internal control system applies to all the three major areas of control: 

operations, compliance with laws and regulations, and financial reporting. The 
Appendix B – Notice of Findings and Recommendations and Agency Responses

Page 5 of 13

audit committee is the governing body’s first line of defense with respect to the 

system of internal control over financial reporting.

Cause:

Members of the Council are typically appointed based on their knowledge of substantive 

disability policy rather than for their corporate governance expertise. The Council’s governing 

bylaws were not implemented to ensure effective financial management oversight of the agency. 

Although NCD established a Finance Committee, the role and responsibilities of the Finance 

Committee were not sufficiently documented, thereby creating deficiencies in the internal control 

environment of the Council.

Furthermore, roles and responsibilities were not adequately specified and delegated from the 

Council to the Executive Director, and from the Executive Director to other staff, to ensure 

effective separation of execution and oversight functions. 

Structural weaknesses were exposed and exacerbated by extensive turnover. In September 2009 

the Vice Chair and Finance Committee Chair resigned. In October 2010 the Executive Director 

resigned with an effective last day of January 8, 2010. On December 17, 2009 eight new 

members were nominated to serve on the Council and shortly thereafter a new Chairperson was 

appointed among previously serving members until the designation of a new Chairperson upon 

confirmation. On December 23, 2009 the previous Chairperson resigned effective immediately—

two weeks before the scheduled last day of the Executive Director. At the time, the Executive 

Director presided over a flat organizational structure and directly played critical roles in 

authorizing and executing transactions, developing and executing contracts, monitoring internal 

controls, and monitoring the performance of service providers and other government support 

contracts. 

Because the Executive Director departed during a transition period in leadership among Council 

members including the Chairperson of the agency, the interim Chair filled the position on a 

short-term acting basis by appointing an individual from within the staff until the newly 

confirmed Chair could select a permanent Executive Director. However, the Acting Executive 

Director did not possess the same financial and internal control expertise or experience as the 

former Executive Director. Finally, a new Executive Director was not selected until September 

2010, and his prior obligations delayed the starting date until November 15—more than 10 

months after the Executive Director’s departure. The concentration of critical management and 

oversight functions in one individual put NCD at risk that these functions could not be performed 

as intended once that individual departed.

Effect:

By not documenting roles and responsibilities of the Finance Committee and individual staff, the 

Council was inconsistent with its approach to governance and oversight of the agency, which 

was even more prevalent in fiscal year 2010 as a result of the significant turnover on the Council. 
Appendix B – Notice of Findings and Recommendations and Agency Responses

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Furthermore, the lack of delegation of responsibilities to the appropriate level within the agency 

caused too many functions to be controlled by one individual. 

The ineffective control environment also exposes NCD to significant risk of material 

misstatement of the financial statements. Material audit adjustments related to improper 

recording of accounts payable (with corresponding effects on budgetary accounts) were detected 

in fiscal year 2009 and 2010 audits. The significant leadership turnover in fiscal year 2010 

exacerbates risks and undermines control effectiveness.

Recommendations:

The Council should establish a senior management council to serve the audit committee function 

based on the best practices presented by the Government Accountability Office (GAO) and 

AICPA Audit Committee Effectiveness Center. We recommend the agency create a senior 

management council, select its members, and write a memorandum of roles and responsibilities 

by June 30, 2011.

NCD should review the materials on the audit committee effectiveness center. 

http://www.aicpa.org/ForThePublic/AuditCommitteeEffectiveness/Pages/ACEC.aspx

NCD should purchase ―The AICPA Audit Committee Toolkit‖ Government Organizations‖ 

which provides sample checklists, matrices, reports, questionnaires and other materials pertinent 

to a government organization.

Now we wish to provide some commentary of specific oversight activities this senior 

management council should conduct.

We believe there are opportunities for improving how an audit committee and senior 

management review financial statements and evaluate internal control effectiveness, assesses the 

effectiveness of internal control design and implementation, and perform other audit committeerelated activities. This oversight group should meet at least on a quarterly basis and address 

issues that are the typical responsibility of an audit committee. Accordingly, we think the key 

activities this oversight group should address at quarterly meetings are:

1. Reviewing the financial statements produced by the accounting service provider (GSA 

ESD) each quarter and at year-end.

2. Monitoring progress on implementation of auditor recommendations. This should be 

done in the form of a matrix with timelines for implementation corrective actions, 

assignment of responsibilities, and procedures for verifying implementation.

3. Identifying risks to reliability of financial reporting and compliance with laws and 

regulations. This assessment should be written and reviewed at least annually. Minutes 

should be taken of discussions of these matters. See NFR 10-02 for details.
Appendix B – Notice of Findings and Recommendations and Agency Responses

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4. Discussing fraud risk factors and who in the organization is responsible for fraud 

prevention, detection and deterrence. We have provided you a fraud risk self-assessment 

questionnaire developed by the Association of Certified Fraud Examiners. See NFR 10-

02 for details.

5. Discussing the effectiveness of design of key internal controls to reduce identified risks 

to an acceptable level, verifying the implementation of those key controls, and 

periodically testing the operating effectiveness of those controls. This should all be 

documented in writing. See NFR 10-03 for details.

6. Discussing how effectively the agency integrates its internal controls over initiating, 

authorizing, processing, recording, reconciling and reporting events and transactions with 

the systems and processes of GSA ESD, the accounting and payroll service provider. 

This includes understanding that GSA states its controls are only effective of its clients 

have:

 Controls to provide reasonable assurance that transactions are entered and 

processed completely and accurately.

 Controls to provide reasonable assurance that produced reports accurately and 

completely reflect the information supplied to the service provider.

 Controls to provide reasonable assurance that any significant obligation, accrual 

or payment anomalies affecting budgeted amounts are identified and resolved in a 

timely manner.

7. Preparing for the following year’s audit. This includes reviewing policies and procedures 

to determine they are up to date and reviewing documentation to assess completeness.

8. Developing key performance indicators that measure financial, program and operational 

performance.

We strongly recommend a detailed set of minutes summarizing discussion topics and actions 

items from these quarterly senior management council meetings. 

Agency Response:

Management concurs with the finding and recommendations. We will develop a corrective 

action plan within 30 days. It is the Council’s goal to implement procedures that will address 

and resolve the internal control weakness no later than June 30, 2011.
Appendix B – Notice of Findings and Recommendations and Agency Responses

Page 8 of 13

NFR 10-02: Ineffective Risk Assessment Process

Condition:

National Council on Disability has not developed or implemented a formal risk assessment 

process to comprehensively identify, analyze, and evaluate risks that could lead to a material 

misstatement of the financial statements or a misappropriation of assets or fraudulent financial 

reporting.

Criteria:

The Federal Manager’s Financial Integrity Act of 1982 (FMFIA) requires federal agency 

managers to comply with specific standards for internal control established by the U.S. 

Government Accountability Office (GAO). Specific control guidance is provided in GAO’s 

Standards for Internal Control in the Federal Government (Green Book). As a federal agency, 

NCD is required to design and implement internal controls to provide reasonable assurance over 

the reliability of financial reporting and compliance with laws and regulations. Programs to 

detect, prevent and deter fraud encompass both of these control objectives. The Committee of 

Sponsoring Organizations of the Treadway Commission’s (COSO) “Internal Control –

Integrated Framework” established standards for designing and implementing effective internal 

controls that have been universally adopted by the accounting profession, the federal government 

and the private sector. COSO presents five interrelated components of internal control: control 

environment, risk assessment, control activities, information and communication system and 

monitoring. Statement of Auditing Standards (SAS) 109, Understanding the Entity and Its 

Environment and Assessing the Risks of Material Misstatement, provides auditors guidance for 

evaluating an entity’s risk assessment process. SAS 109 states: “An entity’s risk assessment 

process for financial reporting purposes is its identification, analysis, and management of risks 

relevant to the preparation of financial statements that are presented fairly in conformity with 

generally accepted accounting principles. For example, risk assessment may address how the 

entity considers the possibility of unrecorded transactions or identifies and analyzes significant 

estimates relevant to financial statements. Risks relevant to reliable financial reporting also 

relate to specific events or transactions.” 

Cause:

The agency has not developed a formal process for developing a written risk assessment of 

financial reporting, fraud and compliance risks, and reviewing that risk assessment against 

changes in the operating environment on a period basis.

Effect:

Material misstatements of the financial statements, fraud risks or noncompliance with laws and 

regulations that could have a direct and material effect on the financial statements could occur 

and go undetected. Audits for fiscal years ended September 30, 2010 and 2009 detected material 

errors in financial reporting that went undetected by the entity’s internal control structures and 
Appendix B – Notice of Findings and Recommendations and Agency Responses

Page 9 of 13

required material audit adjustments to fairly present the financial statements. Audit adjustments 

focused on improper recording of A/P accruals, undelivered orders, obligations and 

deobligations.

Recommendation:

NCD should conduct a formal risk assessment resulting in a written document, to be updated 

annually and shared with its accounting service provider. The risk assessment should include:

1. Identifying which account balances and significant transaction classes that contain the 

highest risk of error and evaluating the effectiveness of internal controls that are in place 

to reduce those risks to an acceptable level. This should include a review of audit 

adjustments for prior years to identify account balances and significant classes of 

transactions that have contained errors and omissions that have materially misstated the 

draft financial statements. Adjustments have been primarily related to cut off (recording 

expenditures in the proper year).

2. Identifying risks of material misstatement, non-compliance with laws and regulations, or 

fraud that result from internal control deficiencies identified during the audit process. 

This should include making a list of the relevant laws and regulations to which the 

agency is subject and identifying controls to ensure compliance. See OMB Bulletin No 

07-04 Audit Requirements for Federal Financial Statements, as amended and GAO 

Financial Audit Manual 802 for details. Also see www.ignet.gov materials on Improper 

Payments Act.

3. Identifying fraud risks. We have provided a Fraud Prevention Checkup prepared by the 

Association of Certified Fraud Examiners. This is a self-assessment questionnaire we 

recommend senior management review and update this on an annual basis.

4. Identifying risks related to changes in the environment, such as growth, personnel 

changes, new technology, new programs or new regulations. Turnover of key personnel 

in the accounting organization has negatively impacted the organization. A continuity of 

operations plan should be developed to reduce potential adverse effects of key person 

dependencies and departures of key personnel.

5. Making cost-benefit-risk assessments as to where limited resources can be most 

effectively deployed to strengthen internal controls. In general, investing in entity level 

controls (control environment, risk assessment, information & communication, and 

monitoring) and financial close and reporting processes provides a greater value than 

investing in activity-level controls targeting specific account balances or transaction 

types.
Appendix B – Notice of Findings and Recommendations and Agency Responses

Page 10 of 13

Agency Response:

Management concurs with the finding and recommendations. We will develop a corrective 

action plan within 30 days. It is the Council’s goal to implement procedures that will address 

and resolve the internal control weakness no later than June 30, 2011.

NFR 10-03: Ineffective Ongoing Monitoring of Internal Control Effectiveness

Condition:

National Council on Disability lacks a well-defined process to regularly evaluate whether 

internal controls are effectively designed, have been properly implemented, and are operating 

effectively.

Criteria:

The Federal Manager’s Financial Integrity Act of 1982 (FMFIA) requires all federal agencies to 

annually assess and report on the adequacy of management control systems. GAO and OMB 

have established guidelines for agencies to monitor on an on-going basis the effectiveness of 

internal controls in detecting and preventing material misstatements to the financial statements 

and complying with relevant laws and regulations. Additionally, Statement of Auditing 

Standards (SAS) 109 Understanding the Entity and Its Environment and Assessing the Risks of 

Material Misstatement states: ―An important management responsibility is to establish and 

maintain internal control on an ongoing basis. Management’s monitoring of controls includes 

whether they are operating as intended and that they are modified as appropriate for changes in 

conditions.‖ 

Cause:

Management has not created a system for evaluating the effectiveness of the design, 

implementation and operation of internal control. 

Effect:

A control deficiency may occur in the course of the organization’s operations and not be 

detected, leading to a misstatement of the organization’s financial statements, misappropriation 

of assets or noncompliance with relevant laws, regulations, grants and contracts.

Recommendation:

Management should first perform the risk assessment process recommended in NFR 10-02 

Ineffective Risk Assessment Process. Then management should develop a streamlined approach 

to evaluating the effectiveness of controls designed to reduce the risks of material misstatement 

of financial statements to an acceptable level. Evaluations should be documented in writing. 

Results should be shared with the service provider where appropriate.
Appendix B – Notice of Findings and Recommendations and Agency Responses

Page 11 of 13

On-going monitoring of internal control effectiveness should include activities such as 

management’s review of whether: (1) financial transactions are being initiated, authorized, 

recorded and processed through to the general ledger in accordance with policies, procedures and 

controls on a consistent basis or if controls are being overridden, (2) internal controls are 

effectively detecting and preventing the types of errors or omissions anticipated by the agency’s 

risk assessment process the GSA External Services Division ―user control considerations‖ in its 

SAS 70 reports for the Pegasys Financial Management System and the Payroll Accounting and 

Reporting System, (3) key persons are ensuring compliance with terms of relevant laws, 

regulations, grants and contracts, (4) ensuring that the findings of audits and other internal or 

external financial and program reviews are promptly resolved and that results of monitoring are 

reported to the agency’s governing body. 

The Chief Financial Officer’s Council (www.cfoc.gov) Implementation Guide for OMB Circular 

A-123 provides a blueprint for federal agencies to evaluate and test internal control. While the 

risk assessment process is designed to identify risks and design and implement key controls to 

reduce those risks to acceptable levels, once that is completed, management should monitor 

whether those key controls are operating effectively. Acceptable tests of operating effectiveness 

typically involve: (i) inspection of documents, reports, or electronic files demonstrating control 

performance, (ii) reperforming the application of specific controls, (iii) observing the application 

of specific controls in operation, (iv) inquiry of appropriate personnel, and (v) a walkthrough 

tracing a transaction from origination through the information system until the transaction is 

reflected in the financial reports. A walkthrough encompasses the entire process of initiating, 

authorizing, recording, processing, and reporting individual transactions and controls for each 

significant process.

Agency Response:

Management concurs with the finding and recommendations. We will develop a corrective 

action plan within 30 days. It is the Council’s goal to implement procedures that will address 

and resolve the internal control weakness no later than June 30, 2011.

Process/Activity Level Controls

10-04: Ineffective Process for Period End Review of Accounts Payable and Undelivered 

Orders (Repeat Condition)

Condition: 

The National Council on Disability lacks formal policies and procedures to facilitate the timely 

identification and estimation of accruals related to accounts payable, and the validation of 

outstanding obligations at period-end. 
Appendix B – Notice of Findings and Recommendations and Agency Responses

Page 12 of 13

Criteria:

Statement of Federal Financial Accounting Standards (SFFAS) Number 1, Accounting for 

Selected Assets and Liabilities, defines accounts payable as ―amounts owed by a federal entity 

for goods and services received from, progress in contract performance made by, and rents due 

to other entities.‖ SFFAS No. 1 further indicates, ―[i]f invoices for those goods [or services] are 

not available when financial statements are prepared, the amounts owed should be estimated.

The Federal Manager’s Financial Integrity Act of 1982 (FMFIA) required the Government 

Accountability Office (GAO) to establish standards for internal control. GAO/AIMD-00-21.3.1, 

Standards for Internal Control in the Federal Government, provides, ―[t]ransactions should be 

promptly recorded to maintain their relevance and value to management...This applies to the 

entire process or life cycle of a transaction...In addition, control activities help to ensure that all 

transactions are completely and accurately recorded...Internal control and all transactions and 

other significant events need to be clearly documented, and the documentation should be readily 

available for examination. The documentation should appear in management directives, 

administrative policies, or operating manuals and may be in paper or electronic form.‖

Cause:

The National Council on Disability has not developed formal policies and procedures to facilitate 

the timely identification and estimation of accruals related to accounts payable, and the 

validation of outstanding obligations at period-end. Furthermore, NCD has not provided training 

outlining roles and responsibilities to those individuals involved in monitoring contracts (e.g. the 

contracting officer’s technical representatives (COTRs).

Effect:

The National Council on Disability failed to identify a material amount in goods and services 

received prior to year-end, which should have been accrued as of September 30, 2010. This 

oversight led to a material understatement of accounts payable and expenses and an 

overstatement of undelivered orders that was identified in the course of conducting the audit. An 

adjustment was proposed by the auditors and recorded by management, thereby ensuring that the 

financial statements were properly stated. This same error was detected during the fiscal year 

2009 audit. Additionally, fiscal year 2010 audit adjustments also detected errors in the accuracy 

and completeness of recording obligations and deobligations. Deficiencies in budget execution 

controls increase the risk of non-compliance with the Anti-Deficiency Act.

Furthermore, without effective monitoring of contracts, which includes training of personnel, 

there is an increased risk that the National Council on Disability may be receiving goods or 

services that may not comply with the terms and conditions of the contracts. This could lead to a 

violation of the Improper Payments Act.
Appendix B – Notice of Findings and Recommendations and Agency Responses

Page 13 of 13

Recommendations:

The National Council on Disability should formally document the policy and procedures 

necessary to facilitate the period-end financial close and reporting process. The policy and 

procedures discussed above should incorporate the following elements:

1. Review all current, active contracts to identify if an accrual would be necessary. If 

needed, contact the vendor to determine how much is expected to be invoiced for the 

goods or services provided for the period of accrual.

2. Review purchase card and travel card transactions to identify any costs incurred 

associated with the period of accrual. 

3. Obtain and review the aging obligation detail report, at least quarterly, to determine 

whether obligations, undelivered orders, accounts payable accruals, and total payments 

for each obligation are accurate and complete.

4. Develop a written list of accounts payable accruals, requests for deobligations, and/or 

other corrections required prior to submission of the periodic financial statements to the 

Office of Management and Budget (OMB) and the independent auditor.

5. Reconcile financial statements to source documentation, prior to finalizing and 

submitting the statements to OMB and the independent auditor.

6. Identify the vendors or classes of transactions that present the greatest risk of error, 

develop controls to reduce those risks to an acceptable level, and perform on-going 

monitoring of the operating effectiveness of those controls.

7. Provide training to all staff to ensure the staff are familiar with the policy and procedures, 

and understand their roles and responsibilities as it pertains to reviewing contracts and 

determining if information is needed from the vendor to support an accrual.

Agency Response:

Management concurs with the finding and recommendations. We will develop a corrective 

action plan within 30 days. It is the Council’s goal to implement procedures that will address 

and resolve the internal control weakness no later than June 30, 2011.
FY 2010 Performance & Accountability Report Page 43

National Council on Disability

Balance Sheet

As of September 30, 2010 and 2009

(in dollars)

2010 2009

Assets:

 Intragovernmental:

 Fund Balance with Treasury (Note 2) $ 1,711,213 $ 1,569,815

 Total Intragovernmental 1,711,213 1,569,815

Total Assets $ 1,711,213 $ 1,569,815

Liabilities:

 Intragovernmental:

Accounts payable $ 131 $ 27,385

Other (Note 4) 13,266 12,512

 Total Intragovernmental 13,397 39,897

 Accounts payable 245,656 87,812 

 Other (Note 4) 174,807 154,152

 Total Liabilities 433,860 281,861

Net Position:

 Unexpended appropriations -- Earmarked Funds (Note 7) 105,379 157,762

 Unexpended appropriations -- Other Funds 1,265,600 1,225,602

 Cumulative results of operations (93,626) (95,410)

 Total Net Position 1,277,353 1,287,954

Total Liabilities and Net Position $ 1,711,213 $ 1,569,815

The accompanying notes are an integral part of these statements.
FY 2010 Performance & Accountability Report Page 44

National Council on Disability

STATEMENT OF NET COST

For the Years Ended September 30, 2010 and 2009

(in dollars)

2010 2009

Program costs:

Total program costs $ 3,340,387 $

 

3,113,436

 

The accompanying notes are an integral part of these statements.
FY 2010 Performance & Accountability Report Page 45

National Council on Disability

Statement of Changes in Net Position

For the Year Ended September 30, 2010

(In Dollars)

2010

Earmarked 

Funds

All Other 

Funds

Consolidated 

Total

Cumulative Results of Operations:

 Beginning Balance $ $ (95,410) $ (95,410)

Budgetary Financing Sources:

 Appropriations used 52,383 3,230,789 3,283,172

Other Financing Sources (Non-Exchange):

 Imputed financing costs 58,999 58,999

 Total Financing Sources 52,383 3,289,788 3,342,171

 Net Cost of Operations 52,383 3,288,004 3,340,387

 Net Change 1,784 1,784

 Cumulative Results of Operations $ $ (93,626) $ (93,626)

Unexpended Appropriations:

 Beginning balance $ 157,762 $ 1,225,602 $ 1,383,364

Budgetary Financing Sources:

 Appropriations received 3,271,000 3,271,000

 Appropriations used (52,383) (3,230,789) (3,283,172)

 Other Adjustments (213) (213)

 Total budgetary financing sources (52,383) 39,998 (12,385) 

 Total unexpended appropriations 105,379 1,265,600 1,370,979

 Net Position $ 105,379 $ 1,171,974 $ 1,277,353

The accompanying notes are an integral part of these statements.
FY 2010 Performance & Accountability Report Page 46

National Council on Disability

Statement of Changes in Net Position

For the Year Ended September 2009

(In Dollars)

2009

Earmarked 

Funds

All Other 

Funds

Consolidated 

Total

Cumulative Results of Operations:

 Beginning Balance $ $ (81,375) $ (81,375)

Budgetary Financing Sources:

 Appropriations Used 110,828 2,933,800 3,044,628

Other Financing Sources (Non-Exchange):

 Imputed Financing Costs 54,773 54,773

 Total Financing Sources 110,828 2,988,573 3,099,401

 Net Cost of Operations 110,828 3,002,608 3,113,436

 Net Change (14,035) (14,035)

 Cumulative Results of Operations $ $ (95,410) $ (95,410)

Unexpended Appropriations:

 Beginning Balance $ 268,590 $ 968,281 $ 1,236,871

Budgetary Financing Sources:

 Appropriations Received 3,206,000 3,206,000

 Appropriations Used (110,828) (2,933,800) (3,044,628)

 Other Adjustments (14,879) (14,879)

 Total Budgetary Financing Sources (110,828) 257,321 146,493 

 Total Unexpended Appropriations 157,762 1,225,602 1,383,364

 Net Position $ 157,762 $ 1,130,192 $ 1,287,954

The accompanying notes are an integral part of these statements.
FY 2010 Performance & Accountability Report Page 47

National Council on Disability

Statement of Budgetary Resources

For the Years Ended September 30, 2010 and 2009

(In Dollars)

2010 2009

Budgetary Resources:

 Unobligated balance, brought forward, October 1 $ 516,232 $ 415,579

 Recoveries of prior year unpaid obligations 65,637 178,168

 Total resources from prior year 

 Budget authority:

 Appropriation (Note 1) 3,271,000 3,206,000

 Spending authority from offsetting collections:

 Earned

 Collected 3,292 500

 Permanently Not Available (213) (14,879)

 Total Budgetary Resources $ 3,855,948 $ 3,785,368

Status of Budgetary Resources:

 Obligations incurred: 

Direct $ 3,268,566 $ 3,269,136

 Unobligated balance: 

Available

Not Available

263,879

323,503

257,081

259,151

 Total status of budgetary resources $ 3,855,948 $ 3,785,368

Change in Obligated Balance:

 Obligated balance, net

 Unpaid obligations, brought forward, October 1 $ 1,053,583 $ 924,491

 Total unpaid obligated balance, net 1,053,583 924,491

 Obligations Incurred, net 3,268,566 3,269,136

 Gross outlays (3,132,681) (2,961,876)

 Recoveries of prior year unpaid obligations, actual (65,637) (178,168)

 Obligated balance, net, end of period:

 Unpaid obligations 1,123,831 1,053,583

 Total, unpaid obligated balance, net, end of period $ 1,123,831 $ 1,053,583

Net Outlays

Net outlays:

Gross outlays 3,132,681 2,961,876

Offsetting collections (3,292) (500)

 Net outlays $ 3,129,389 $ 2,961,376

The accompanying notes are an integral part of these statements.
NOTES to the FINANCIAL STATEMENTS

FY 2010 Performance & Accountability Report Page 48

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES

Reporting Entity

The National Council on Disability (NCD) is an independent agency of the Executive Branch of 

the United States Government that makes recommendations to the President and Congress on 

issues affecting Americans with disabilities.

NCD was initially established in 1978 as an advisory board within the Department of Education 

(Public Law 95-602). The Rehabilitation Act Amendments of 1984 (Public Law 98-221) 

transformed NCD into an independent agency and required NCD to provide expert advice to 

Congress and the Administration. The Rehabilitation Act Amendments of 1992 and 1998 and the 

Education of the Deaf Act Technical Amendments of 1993 updated NCD’s statutory mandate.

NCD is composed of fifteen members appointed by the President and confirmed by the U.S. 

Senate. The Council members set the agency budget and establish the parameters for what it will 

support. The NCD Executive Director has full responsibility for carrying out the agency’s 

operations as necessary to accomplish the goals and mission of the agency as established by the 

Council members.

NCD’s overall purpose is to promote policies, programs, practices, and procedures that guarantee 

equal opportunity for all individuals with disabilities, regardless of the nature or severity of the 

disability; and to empower individuals with disabilities to achieve economic self-sufficiency, 

independent living, and inclusion and integration into all aspects of society. This mission is 

accomplished by serving as a policy agency that publishes reports and works with other federal 

agencies on policy development and implementing best practices. 

Basis of Presentation

These financial statements have been prepared from the accounting records of NCD in 

accordance with generally accepted accounting principles (GAAP) as promulgated by the 

Federal Accounting Standards Advisory Board (FASAB), and the form and content for entity 

financial statements specified by the Office of Management and Budget (OMB) in OMB 

Circular No. A-136, Financial Reporting Requirements. GAAP for Federal entities is the 

hierarchy of accounting principles prescribed in Statement of Federal Financial Accounting 

Standards (SFFAS) 34, The Hierarchy of Generally Accepted Accounting Principles, including 

the Application of Standards issued by the Financial Accounting Standards Board.

OMB Circular No. A-136 requires agencies to prepare principal statements, include a Balance 

Sheet, Statement of Net Cost, Statement of Changes in Net Position, Statement of Budgetary 

Resources. The balance sheet presents, as of September 30, 2010, amounts of future economic 

benefits owned or managed by NCD (assets), amounts owed by NCD (liabilities), and amounts 

which comprise the difference (net position). The Statement of Net Cost reports the full cost of 

the program, both direct and indirect costs of the output, and the costs of identifiable supporting 
NOTES to the FINANCIAL STATEMENTS

FY 2010 Performance & Accountability Report Page 49

services provided by other segments within NCD and other reporting entities. The Statement of 

Budgetary Resources reports an agency’s budgetary activity.

Basis of Accounting

Transactions are recorded on the accrual accounting basis in accordance with OMB Circular No. 

A-136. Under the accrual basis of accounting, revenues are recognized when earned, and 

expenses are recognized when a liability is incurred, without regard to receipt or payment of 

cash. 

Use of Estimates

The preparation of financial statements requires management to make estimates and assumptions 

that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and 

liabilities at the date of the financial statements, and the reported amounts of revenues and 

expenses during the reporting period. Actual results may differ from those estimates.

Budgets and Budgetary Accounting

NCD follows standard federal budgetary accounting policies and practices in accordance with 

OMB Circular No. A-11, ―Preparation, Submission, and Execution of the Budget,‖ dated June 

2008. Budgetary accounting facilitates compliance with legal constraints and controls over the 

use of federal funds. Each year, Congress provides NCD appropriations to incur obligations in 

support of agency programs. For fiscal years 2010 and 2009, NCD is accountable for general 

fund appropriations and no-year fund carryover. NCD recognizes budgetary resources as assets 

when cash (funds held by Treasury) is made available through warrants and when spending 

authority from the offsetting collections is incurred.

Revenues and Other Financing Sources

NCD receives substantially all of the funding needed to support its programs through 

appropriations. NCD receives annual appropriations that may be used, within statutory limits, for 

operating and capital expenditures. Additionally, in FY 2007, NCD received $300,000 in no-year 

funds, which is described in greater detail in Note 7. Appropriations are recognized as revenues 

as the related programs or administrative expenses are incurred.

Other financing sources for NCD consist of imputed financing sources which are costs financed 

by other federal entities on behalf of NCD, as required by SFFAS No. 5, Accounting for 

Liabilities of the Federal Government. In certain instances, operating costs of NCD are paid out 

of funds appropriated to other federal agencies. In accordance with SFFAS 5, all expenses of a 

federal entity should be reported by that agency regardless of whether the agency will ultimately 

pay those expenses. Amounts for certain expenses of NCD, which will be paid by other federal 

agencies, are recorded in the Statement of Net Cost. A related amount is recognized in the 

Statement of Changes in Net Position as an imputed financing source. NCD records imputed 

expenses and financing sources for employee retirement plan contributions, group term life 
NOTES to the FINANCIAL STATEMENTS

FY 2010 Performance & Accountability Report Page 50

insurance, and health benefit costs, which are paid by the Office of Personnel Management 

(OPM).

Compensation and Benefits

Salaries of employees are recognized as accrued payroll expenses and related liabilities as 

earned. These expenses are recognized as a funded liability when accrued. 

Annual leave is accrued as it is earned by employees and is included in personnel compensation 

and benefit costs. An unfunded liability is recognized for earned but unused annual leave, since 

from a budgetary standpoint, this annual leave will be paid from future appropriations when 

employees use the leave. The amount accrued is based upon current pay rates for employees. 

Sick leave and other types of leave that are not vested are expensed when used and no future 

liability is recognized for these amounts.

NCD’s employees participate in one of two retirement programs, either the Civil Service 

Retirement System (CSRS) or the Federal Employees Retirement System (FERS), which became

effective on January 1, 1987. NCD and its employees both contribute to these systems. Although 

NCD funds a portion of the benefits under CSRS and FERS and makes the necessary payroll 

withholdings, it does not report assets associated with these benefit plans in accordance with 

SFFAS 5.

For CSRS employees, NCD contributes an amount equal to 11.2 percent of the employees’ basic 

pay to the plan. For FERS employees, NCD contributes an amount equal to seven percent of the 

employees’ basic pay to the plan. 

Both CSRS employees and FERS employees are eligible to participate in the Thrift Savings Plan 

(TSP). The TSP is a defined contribution retirement plan intended to supplement the benefits 

provided under CSRS and FERS. For FERS employees, NCD contributes an amount equal to 

one percent of the employee’s basic pay to the TSP and matches employee contributions up to an 

additional four percent. CSRS employees receive no matching contribution from NCD.

OPM is responsible for reporting assets, accumulated plan benefits, and unfunded liabilities, if 

any, applicable to CSRS participants and FERS employees government-wide, including NCD’s 

employees. NCD has recognized an Imputed Cost and Imputed Financing Source for the 

difference between the estimated service cost and the contributions made by NCD and its 

covered employees. The estimated cost of pension benefits is based on rates issued by OPM.

Employees are entitled to participate in the Federal Employees Group Life Insurance (FEGLI) 

Program. Participating employees can obtain ―basic life‖ term life insurance, with the employee 

paying two-thirds of the cost and NCD paying one-third. Additional coverage is optional, to be 

paid fully by the employee. The basic life coverage may be continued into retirement if certain 

requirements are met. OPM administers the FEGLI program and is responsible for the reporting 

of related liabilities. Each fiscal year, OPM calculates the U.S. Government’s service cost for 

the post-retirement portion of basic life coverage. Because NCD’s contributions to the basic life 
NOTES to the FINANCIAL STATEMENTS

FY 2010 Performance & Accountability Report Page 51

coverage are fully allocated by OPM to the pre-retirement portion of coverage, the Board has 

recognized the entire service cost of the post-retirement portion of basic life coverage as an 

Imputed Cost and Imputed Financing Source.

Assets and Liabilities

Intra-governmental assets and liabilities arise from transactions between NCD and other Federal 

entities. Funds with the U.S. Treasury comprise the majority of assets on NCD’s balance sheet. 

All other assets result from activity with non-federal sources.

Liabilities represent amounts that are likely to be paid by NCD as a result of transactions that 

have already occurred. The accounts payable portion of liabilities consists of amounts owed to 

federal agencies and commercial vendors for goods, services, and other expenses received but 

not yet paid.

Liabilities covered by budgetary or other resources are those liabilities of NCD for which 

Congress has appropriated funds, or funding is otherwise available to pay amounts due.

Fund Balance with Treasury

The U.S. Department of the Treasury (Treasury) processes NCD’s receipts and disbursements. 

Fund Balance with Treasury (FBWT) is the aggregate amount of the agency’s accounts with 

Treasury for which the agency is authorized to liquidate obligations, pay funded liabilities, and 

make expenditures. The fund balance is increased through the receipt of non-expenditure 

Treasury warrants for appropriations, positive non-expenditure transfers, and other expenditure 

inflows of funds. FBWT is reduced through non-expenditure Treasury Warrants for rescissions, 

negative non-expenditure transfers, disbursements, and other expenditure cash outflows of funds.

NCD’s funds with the U.S. Treasury are cash balances from appropriations as of the fiscal yearend from which NCD is authorized to make expenditures and pay liabilities resulting from 

operational activity.

General Property, Plant, and Equipment, Net

Property, plant, and equipment (PP&E) have been defined in the Federal Government as tangible 

items owned by the Federal Government and having an expected useful life of greater than two 

years. 

NCD records PP&E at acquisition cost. The capitalization threshold is $5,000 for assets with a 

useful life of two or more years. For bulk purchases, items will be capitalized when the 

individual useful lives are at least two years and the property has an aggregate value of $100,000 

or more. Depreciation on assets is calculated using the straight-line method. Depreciation begins 

the month after the asset is placed in service. Depreciation is calculated using a useful life of 

four years for Equipment & Furniture.
NOTES to the FINANCIAL STATEMENTS

FY 2010 Performance & Accountability Report Page 52

The costs of any leasehold improvements financed with NCD appropriated funds is capitalized if 

the total cost exceeds $25,000. Construction costs are accumulated as ―construction in-progress‖ 

until completion, at which time they are transferred to ―leasehold improvements‖ and 

depreciated over seven years or the remainder of the lease, whichever is less.

Internal use software development and acquisition costs of $25,000 are capitalized as ―software 

development-in-progress‖ until the development stage is completed and the software is 

successfully tested. At acceptance, ―software development-in-progress‖ costs are reclassified as 

―internal use software‖ and amortized using the straight-line method over an estimated useful life 

of four years.

Acquisitions of PP&E that do not meet the capitalization criteria outlined above are recorded as 

operating expenses. General PP&E consists of items that are used by NCD to support its mission. 

Also, maintenance, repairs and minor renovations are expensed as incurred.

Prepaid and Deferred Charges

Payments in advance of the receipt of goods and services are recorded as prepaid charges at the 

time of prepayment and recognized as expenses when the related goods and services are 

received.

Liabilities

Liabilities represent amounts expected to be paid as the result of a transaction or event that has 

already occurred. Liabilities covered by budgetary resources are liabilities incurred which are 

covered by realized budgetary resources as of the balance sheet date. Unfunded liabilities are not 

considered to be covered by such budgetary resources. Examples of unfunded liabilities are 

actuarial liabilities for future Federal Employees’ Compensation Act (FECA) payments and 

annual leave. The Government, acting in its sovereign capacity, can abrogate liabilities arising 

from other than contracts.

Net Position

Net position consists of unexpended appropriations and cumulative results of operations. 

Unexpended appropriations represent budgetary authority, including unobligated or obligated 

balances. Cumulative results of operations is comprised of the following: (1) the difference 

between revenues and expenses and (2) the net amount of transfers of assets in and out without 

reimbursement.

NOTE 2 – FUND BALANCE WITH TREASURY

All of NCD’s Fund Balance with Treasury is derived from appropriations. NCD received 

funding on an annual basis for day-to-day operations. In FY 2007, NCD received no-year funds 

earmarked for necessary expenses related to the requirements of the Post-Katrina Emergency 

Management Reform Act of 2006 (Public Law 109-295). The following provides a summary of 
NOTES to the FINANCIAL STATEMENTS

FY 2010 Performance & Accountability Report Page 53

NCD’s Consolidated Fund Balance with Treasury as of September 30:

Fund Balance with Treasury 2010 2009

 Appropriated Fund $1,711,213 $1,569,815

Status of Fund Balance with Treasury

 Unobligated Balance

 Available 263,879 257,081

 Unavailable 323,503 259,151

 Obligated Balance not yet Disbursed 1,123,831 1,053,583

Total $1,711,213 $1,569,815

NOTE 3 – LIABILITIES NOT COVERED BY BUDGETARY RESOURCES

Liabilities of NCD are classified as liabilities covered or not covered by budgetary resources. As 

of September 30, 2010 and 2009, NCD showed liabilities covered by budgetary resources of 

$340,234 and $186,451, respectively and liabilities not covered by budgetary resources of 

$93,626 and $95,410, respectively. Liabilities covered by budgetary resources is composed of 

the following:

2010 2009

Liabilities Covered by Budgetary Resources

 Accounts Payable $ 245,787 $ 115,197

 Accrued Funded Payroll & Leave 81,181 58,742

 Employer Contributions & Payroll Taxes Payable 13,266 12,512

Total Liabilities $ 340,234 $ 186,451

2010 2009

With the Public

 Other (Unfunded leave liability) $ 93,626 $ 95,410

Total liabilities not covered by budgetary resources 93,626 95,410

Total liabilities covered by budgetary resources 340,234 186,451

Total Liabilities $ 433,860 $ 281,861

Accrued funded payroll liability is covered by budgetary resources and is included in the net cost 

of operations. Whereas, the unfunded leave liability includes the expense related to the decrease 

in annual leave liability for which the budgetary resources will be provided in a subsequent 

period.

NOTE 4 – OTHER LIABILITIES 

As of September 30, 2010 and 2009, other liabilities with the public for consist of Accrued 

Funded Payroll and Leave of $81,181 and $58,742, respectively and unfunded leave in the 

amount of $93,626 and $95,410, respectively. Other Intragovernmental liabilities consist of 
NOTES to the FINANCIAL STATEMENTS

FY 2010 Performance & Accountability Report Page 54

employer contributions and payroll taxes payable for FY 2010 and FY 2009 were $13,266 and 

$12,512, respectively.

2010 2009

Other Liabilities with the Public 

 Non-Current $ 93,626 $ 95,410

 Current 81,181 58,742

Total Other Liabilities $ 174,807 $ 154,152

2010 2009

Intragovenmental 

 Non-Current $ 0 $ 0

 Current 13,266 12,512

Total Other Liabilities $ 13,266 $ 12,512

NOTE 5 - LEASES

NCD leases office space at 1331 F Street, NW, Washington, DC. The lease is deemed an 

operating lease. The future minimum lease payment required under the lease agreement for FY 

2011 is $222,079. NCD lease expires August 21, 2011. NCD is under negotiation to renew its 

lease agreement. 

NOTE 6 – COMMITMENTS AND CONTINGENCIES

The criteria for recognizing contingencies for claims are (1) a past event or exchange transaction 

has occurred as of the date of the statements; (2) a future outflow or other sacrifice of resources 

is probable; and (3) the future outflow or sacrifice of resources is measurable (reasonably 

estimated). NCD recognizes material contingent liabilities in the form of claims, legal action, 

administrative proceedings and environmental suits that have been brought to the attention of 

legal counsel, some of which will be paid by the Treasury Judgment Fund. NCD does not have 

any proceedings, actions, or claims that will not materially affect the financial position of results 

of operations.

NOTE 7 – EARMARKED FUNDS

In 2007, $300,000 was appropriated to remain available until expended, for necessary expenses 

related to the requirements of the Post-Katrina Emergency Management Reform Act of 2006, as 

enacted by the Department of Homeland Security Appropriations Act, 2007 (Public Law 109-

295). This appropriation is accounted for as an earmark in accordance with SFFAS No. 27, 

Identifying and Reporting Earmarked Funds. In FY 2010, NCD used these funds to conduct an 

analysis and review of topics of disaster, emergency management, and disability issues. The goal 

of the analysis was to address gaps in homeland security policy and practices regarding 

individuals with disabilities. 
NOTES to the FINANCIAL STATEMENTS

FY 2010 Performance & Accountability Report Page 55

The following provides a breakout of these funds from the annual appropriation, in relation to 

NCD’s financial statements: 

FY 2010

Earmarked 

Funds Other Funds Total Funds

Balance Sheet as of September 30

ASSETS

Fund Balance with Treasury $ 112,700 $ 1,598,513 $ 1,711,213

 Total Assets $ 112,700 $ 1,598,513 $ 1,711,213

Intragovernmental Liabilities:

Accounts Payable $ 131 $ 131

Other Liabilities 13,266 13,266

Total Intragovenmental Liabilities $ 13,397 $ 13,397

Liabilities with the Public:

Accounts Payable $ 7,321 $ 238,335 $ 245,656

Other Liabilities $ 174,807 $ 174,807

Total Liabilities with the Public $ 7,321 $ 413,142 $ 420,463

Total Liabilites $ 7,321 $ 426,539 $ 433,860

Unexpended Appropriations $ 105,379 $ 1,265,600 $ 1,370,979

Cumulative Results of Operations $ (93,626) $ (93,626)

 Total Liabilities and Net Position $ 112,700 $ 1,598,513 $ 1,711,213

Statement of Net Cost For the 

Period Ended September 30

Gross Program Costs $ 52,383 $ 3,288,004 $ 3,340,387

Net Program Costs $ 52,383 $ 3,288,004 $ 3,340,387

Net Cost of Operations $ 52,383 $ 3,288,004 $ 3,340,387

Statement of Changes in Net Position

For the Period Ended September 30

Cumulative Results of Operations:

Beginning Balances $ (95,410) $ (95,410)

Budgetary Financing Sources:

Appropriations Used $ 52,383 $ 3,230,789 $ 3,283,172

Other Financing Sources

 Imputed Financing $ 58,999 $ 58,999

Total Financing Sources $ 52,383 $ 3,289,788 $ 3,342,171

Net Cost of Operations $ 52,383 $ 3,288,004 $ 3,340,387

Change in Net Position $ 1,784 $ 1,784

Cumulative Results of Operations $ (93,626) $ (93,626)

Unexpended Appropriations:

Beginning Balances $ 157,762 $ 1,225,602 $ 1,383,364

Budgetary Financing Sources:

Appropriations Received 3,271,000 3,271,000

Other Adjustments (213) (213)

Appropriations Used (52,383) (3,230,789) (3,283,172)

Total Budgetary Financing Sources $ (52,383) $ 39,998 $ (12,385)

Total Unexpended Appropriations $ 105,379 $ 1,265,600 $ 1,370,979

Net Position End of Period $ 105,379 $ 1,171,974 $ 1,277,353
NOTES to the FINANCIAL STATEMENTS

FY 2010 Performance & Accountability Report Page 56

NOTE 7 – EARMARKED FUNDS, CONTINUED

Balance Sheet as of September 30

ASSETS

Fund Balance with Treasury $ 157,762 $ 1,412,053 $ 1,569,815

 Total Assets $ 157,762 $ 1,412,053 $ 1,569,815

Intragovernmental Liabilities:

Accounts Payable $ 27,385 $ 27,385

Other Liabilities 12,512 12,512

Total Intragovenmental Liabilities $ 39,897 $ 39,897

Liabilities with the Public:

Accounts Payable $ 87,812 $ 87,812

Other Liabilities $ 154,152 $ 154,152

Total Liabilities with the Public $ 241,964 $ 241,964

Total Liabilites $ 281,860 $ 281,860

Unexpended Appropriations $ 157,762 $ 1,225,602 $ 1,383,364

Cumulative Results of Operations $ (95,410) $ (95,410)

 Total Liabilities and Net Position $ 157,762 $ 1,412,053 $ 1,569,815

Statement of Net Cost For the 

Period Ended September 30

Gross Program Costs $ 110,828 $ 3,002,608 $ 3,113,436

Net Program Costs $ 110,828 $ 3,002,608 $ 3,113,436

Net Cost of Operations $ 110,828 $ 3,002,608 $ 3,113,436

Statement of Changes in Net Position

For the Period Ended September 30

Cumulative Results of Operations:

Beginning Balances $ (81,375) $ (81,375)

Budgetary Financing Sources:

Appropriations Used $ 110,827 $ 2,933,800 $ 3,044,627

Other Financing Sources

 Imputed Financing $ 54,774 $ 54,774

Total Financing Sources $ 110,827 $ 2,988,574 $ 3,099,401

Net Cost of Operations $ 110,828 $ 3,002,608 $ 3,113,436

Change in Net Position $ (14,034) $ (14,035)

Cumulative Results of Operations $ (95,410) $ (95,410)

Unexpended Appropriations:

Beginning Balances $ 268,590 $ 968,281 $ 1,236,871

Budgetary Financing Sources:

Appropriations Received 3,206,000 3,206,000

Other Adjustments (14,879) (14,879)

Appropriations Used (110,828) (2,933,800) (3,044,628)

Total Budgetary Financing Sources $ (110,828) $ 257,321 $ 146,493

Total Unexpended Appropriations $ 157,762 $ 1,225,602 $ 1,383,364

Net Position End of Period $ 157,762 $ 1,130,192 $ 1,287,954
NOTES to the FINANCIAL STATEMENTS

FY 2010 Performance & Accountability Report Page 57

NOTE 8 – INTRAGOVERNMENTAL COSTS AND EXCHANGE REVENUE

Intragovernmental costs are those of goods/services purchased from a federal entity.

2010 2009

Program Costs

 Intragovernmental costs $ 536,324 $ 475,234

 Public costs 2,804,063 2,638,202

Total Program Costs $3,340,387 $3,113,436

NCD does not have any exchange revenue.

NOTE 9 – APPORTIONMENT CATEGORIES OF OBLIGATIONS INCURRED

Apportionment is a plan, approved by OMB to spend resources provided by one of the annual 

appropriations acts, a supplemental appropriations act, a continuing resolution, or a permanent 

law (mandatory appropriations). The apportionment identifies amounts available for obligation 

and expenditure. It specifies and limits the obligations that may be incurred and expenditures 

made (or makes other limitations, as appropriate) for specified time periods, programs, activities, 

projects, objects, or any combination thereof. OMB defines apportionment categories as follows: 

(1) Category A apportionments distribute budgetary resources by fiscal quarters; and (2) 

Category B apportionments typically distribute budgetary resources by activities, projects, 

objects or a combination of these categories.

Obligations for NCD are split between category A and category B, which is the amount of direct 

obligations incurred against amounts apportioned under category A and category B on the latest 

SF 132.

2010 2009

Direct

Category A $ 64,434 $ 129,080

Category B 3,204,132 3,140,056

Total Obligations $3,268,566 $ 3,269,136

NOTE 10 – UNDELIVERED ORDERS AT THE END OF THE PERIOD

Undelivered orders represent the value of goods and services ordered and obligated that have not 

been received. This amount includes any orders for which advance payment has been made but 

for which delivery or performance has not yet occurred. As of September 30, 2010 and 2009, the 

amount of Undelivered Orders was $783,597 and $867,132, respectively.
NOTES to the FINANCIAL STATEMENTS

FY 2010 Performance & Accountability Report Page 58

NOTE 11 – RECONCILIATION OF NET COST OF OPERATIONS (PROPRIETARY) 

TO BUDGET (FORMERLY THE STATEMENT OF FINANCING)

NOTE 12 – SUBSEQUENT EVENTS

NCD has evaluated subsequent events occurring after the balance sheet date and through the date 

of April 29, 2011, the date the financial statements were available for release. Based on this 

evaluation, NCD has determined that no subsequent events have occurred that require disclosure 

in the financial statements.

2010 2009

Resources Used to Finance Activities:

Budgetary Resources Obligated

 Obligations Incurred $ 3,268,566 $ 3,269,136

 Less: Spending Authority from Offsetting Collections 

 and Recoveries 68,929 178,668

 Net Obligations 3,199,637 3,090,468

Other Resources

 Imputed Financing from Costs Absorbed by Others 58,999 54,773

 Other Resources (+/-)

Net Other Resources Used to Finance Activities 58,999 54,773

Total Resources Used to Finance Activities 3,258,636 3,145,241

Resources Used to Finance Items not Part of the Net Cost of Operations

Change in Budgetary Resources Obligated for Goods

 Services and Benefits Ordered But Not Yet Provided (83,535) 45,840

Total Resources Used to Finance Items Not Part of the Net Cost

 of Operations (83,535) 45,840

Total Resources Used to Finance the Net Cost of Operations 3,342,171 3,099,401

Components of the Net Cost of Operations that will not Require or Generate

Resources in the Current Period:

Components Requiring or Generating Resources in Future Periods:

 Increase in Annual Leave Liability (1,784) 14,035

Total Components of Net Cost of Operations that will Require or

Generate Resources in Future Periods (1,784) 14,035

Total Components of Net Cost of Operations that will not Require

or Generate Resources in the Current Period (1,784) 14,035

Net Cost of Operations $ 3,340,387 $ 3,113,436
Section IV Other Accompanying Information

FY 2010 Performance & Accountability Report Page 59

Summary of the Financial Statement Audit and Management’s Assurances

Table 1: Summary of Financial Statement Audit:

Audit Opinion Unqualified

Restatement No

Material Weaknesses Beginning 

Balance

New Resolved Consolidated Ending 

Balance

0 4 0 0 4

Total Material Weaknesses 0 4 0 0 4

Table 2: Summary of Management Assurances:

Summary of Management Assurances Effectiveness of Internal Control over Financial 

Reporting (FMFIA § 2)

Statement of Assurance No Assurance

Material Weaknesses Beginning

Balance

New Resolved Consolidated Reassessed Ending 

Balance

0 1 0 0 0 1

Total Material 

Weaknesses

0 1 0 0 0 1

Summary of Management Assurances Effectiveness of Internal Control over Operations 

(FMFIA § 2)

Statement of Assurance No Assurance

Material Weaknesses Beginning 

Balance

New Resolved Consolidated Reassessed Ending 

Balance

0 3 0 0 0 3

Total Material 

Weaknesses

0 3 0 0 0 3

Conformance with Financial Management Systems Requirements 

(FMFIA § 4)

Statement of Assurance Systems conform to financial management system requirements

Non-Conformances Beginning 

Balance

New Resolved Consolidated Reassessed Ending 

Balance

0 0 0 0 0 0

Total NonConformances0 0 0 0 0 0
Exhibit A List of Acronyms

FY 2010 Performance & Accountability Report Page 60

ADA Americans with Disabilities Act of 1990, as amended

AICPA American Institute of Certified Public Accountants

ATDA Accountability of Tax Dollars Act of 2002

CFO Chief Financial Officer

CFR Code of Federal Regulations

CSRS Civil Service Retirement System

DOL Department of Labor

ED Executive Director

ESEA Elementary and Secondary Education Act

FASAB Federal Accounting Standards Advisory Board

FBWT Fund Balance with Treasury

FECA Federal Employees Compensation Act

FERS Federal Employees’ Retirement System

FFMIA Federal Financial Management Improvement Act

FICA Federal Insurance Contribution Act

FISMA Federal Information Security Management Act

FMFIA Federal Managers’ Financial Integrity Act

FOIA Freedom of Information Act

FTE Full-time Equivalent

FY Fiscal Year

GAAP Generally Accepted Accounting Principles

GAO Government Accountability Office

GPRA Government Performance and Results Act

GSA General Services Administration

IPIA Improper Payments Information Act

IT Information Technology

MD&A Management’s Discussion and Analysis

NCD National Council on Disability

NCLBA No Child Left Behind Act reauthorization

OMB Office of Management and Budget

OPM Office of Personnel Management

PP&E Property, Plant and Equipment

PAR Performance and Accountability Report

SAS Statement on Auditing Standards

SBR Statement of Budgetary Resources

SFFAS Statement of Federal Financial Accounting Standards

SNC Statement of Net Cost

TSP Thrift Savings Plan

UDO Undelivered Orders

USC United States Code